The Presidential Committee on Fiscal Policy and Tax Reforms has recommended raising the value added tax (VAT) from the current 7.5 percent to 10 percent.
This proposal was revealed by the committee’s chairman, Mr. Taiwo Oyedele, during a recent interview.
Mr. Oyedele explained that the committee’s mandate includes consolidating multiple taxes to streamline Nigeria’s tax system and reduce the burden on businesses and individuals. The proposed tax law, which incorporates these changes, will soon be submitted to the National Assembly for consideration.
“We have significant issues with our tax revenue, and our overall fiscal system is in a state of crisis,” Mr. Oyedele stated. “Our committee was tasked with three broad mandates: improving governance and financial coordination, transforming revenue, and managing government assets.”
He highlighted the country’s low revenue profile, noting that even if the entire revenue were dedicated to infrastructure, such as road repairs, it would still be insufficient. To address this, the committee has proposed increasing VAT to 10 percent by 2025, with subsequent increases planned over the following years.
In addition to the VAT hike, the committee has proposed corresponding reductions in personal income tax and corporate tax rates. “For individuals earning up to N1.5 million per month or less, personal income tax will be reduced,” he said.
“Similarly, corporate income tax will be reduced from 30 percent to 25 percent over the next two years—a significant decrease.”
The committee also plans to consolidate various taxes, such as the information and technology (IT) levy and education tax, into a single tax. Initially, this consolidated tax will be set at four percent, with a planned reduction to two percent in the coming years.
The proposed reforms are intended to simplify the tax system, boost compliance, and ultimately increase government revenue, while also providing relief to taxpayers. The timeline for the passage of the new tax law remains uncertain, but the committee is hopeful that the National Assembly will act swiftly.
