By Charles Ebi
Some Nigerians have expressed dissatisfaction over plans by the federal government to increase Value-Added Tax ,VAT, next year.
Already, an executive bill has been sent to the National Assembly to raise VAT from 7.5% to 10% by 2025 and 12.5% by 2026 through 2029.
Besides, the bill, according to the report, is proposing that by 2030, the payment by Nigerians for the tax, which is levied on consumption of goods and services will move to 15%.
“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10% ; (b) 2026, 2027, 2028 and 2029 years of assessment 12.5% (c) 2030 year of assessment and thereafter 15%”, the document stated.
In addition, the bill proposes a reduction in the Corporate Income Tax ,CIT, to 27.5% by 2025 down from 30% and a further cut to 25% by 2026.
Companies with less than N20 million turnover are exempted from paying the CIT, according to the bill, the report stressed.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of; (a) a small company, at zero per cent; and (b) any other company, at the rate of-(i) 27.5 per cent in 2025 year of assessment, and(ii) 25 per cent from 2026 year of assessment”, the document added.
Recall that many multilateral agencies including the International Monetary Fund ,IMF, urged Nigeria to raise VAT to 15%.
However, the bill also indicated that in the instance where in any year of assessment, the effective tax rate of a company is less than 15% such company shall re-compute and pay an additional tax that makes its effective tax rate equal to 15 %, the document stated.
“The provisions of this section shall apply to (a) a company that is a constituent entity of an MNE group; and (b) any other company with an aggregate turnover of N20,000,000,000.00 and above in the relevant year of assessment.
“The companies covered under this section and the determination of the additional tax payable shall be in accordance with regulations issued by the service”.
The Federal Government has consistently raised concern over the performance of VAT in Nigeria, saying it is the lowest in the West African region and insisting that the country’s VAT rate is less than 1 per cent of the Gross Domestic Product ,GDP,
In Q2 of 2024, the National Bureau of Statistics ,NBS, reported that VAT collected stood at N1.56 trillion, indicating a growth rate of 9.11% on a quarter-on-quarter ,QoQ,basis from N1.43 trillion in Q1 2024
