Nigerians should brace up for an additional raise in the Value Added Tax (VAT) – presently at 5 percent, as the federal government which is now under pressure to raise additional revenues rework collection strategy.
Finance Minister, Zainab Ahmed signaled the possible raise on Wednesday as she launched a new initiative which seeks to push revenue generating agencies collect more and get particularly the high networth citizens pay higher taxes.
Ahmed indicated that the raise in VAT would likely be announced within the year- but would not be done across board, “government would adopt a a selective approach,” she said.
She also mentioned that raising VAT would require an ammendment of the constitution and that talks are already progressing on how to send an ammendment bill to the National Assembly to accommodate the new VAT policy.
“We are studying the possibility of a VAT increase but this requires an amendment of the law,” the minister stated while launching a Strategic Revenue Growth Initiative.
The new strategy is specifically aims at mobilising domestic revenues and optimising government approach to revenue generation.
“The steering committee will look at the increase and it’s possible the increase will be on selected items and not across board.
“There will be a VAT increase and during the course of 2019 we will look at what the items will be and what the rates will be and when we have made up our mind we will send an amendment bill to NASS.”
She also hinted that the government will also be introducing luxury taxes and excise duty on carbonated soft drinks “but we have yet to decide on the drinks,” she stated adding “We still have much work to do before we decide on when it will come in force.”
Babatunde Fowler, Chairman, Federal Inland Revenue Service (FIRS) confirmed plans to commence a review of the present legal framework on tax.
He also mentioned that the FIRS plans to collaborate with Deposit Money Banks to get names of companies and individuals with funds in excess of N1 billion to enable them collect appropriate tax.
The FIRS would also collaborate with the Customs Service to get data on companies that import goods into the country to ensure that they pay appropriate tax.
He further mentioned the FIRS plans to commence aggressive mobilsation of property tax.
Hammed Ali, Comptroller-General, Nigeria Customs Service, also hinted of plans to introduce new excise duties and also look at carbonated drinks since they also have health implications for consumers. At the moment, Nigeria collects excise duty only on alcohol and cigarettes.
Ahmed Idris, Accountant-General of the Federation, said government would expand the Treasury Single Account to all existing Nigerian Embassies to enhance revenues and that the modalities was being worked out.
Ahmed Idris, Accountant-General of the Federation, said government would expand the Treasury Single Account to all existing Nigerian Embassies to enhance revenues and that the modalities was being worked out.
Onyinye Nwachukwu, Abuja
