Presidential Fiscal Policy and Tax Reforms Committee Provides Further Update on Proposed VAT in Nigeria

The Presidential  Fiscal Policy and Tax Reforms Committee, chaired by Mr Taiwo Oyedele, has provided  updates on the bill sent to the National Assembly (NASS) for deliberations and passage, which should transform the country’s tax and fiscal landscape when signed into law.

In a recent Television interview, Mr Taiwo Oyedele mentioned changes to the tax structure, including the Value Added Tax (VAT).

National Fiscal Policy

The committee has drafted a new national fiscal policy framework after extensive consultations with citizens, the diaspora, and people with disabilities. The proposed new policy is awaiting the President’s approval.

Tax Laws 

 All the major taxes are identified as company income tax (CIT), personal income tax (PIT), value-added tax (VAT), stamp duties, capital gain tax (CGT), and excise tax. The Committee has redrafted new ones and is just getting to the stages of getting into the National Assembly within the period of one or plus half months.

10 Amendment Bills to Reform Nigeria’s Tax System

The Committee has sent ten (10) amendment bills to the National Assembly to reform the country’s tax system, compressing it from 36 to 8. This will address the country’s multiplicity of taxes.

Withholding Taxes

The Committee proposes that small businesses with annual turnovers of N50m or less be exempt from withholding taxes. The current exemption level for small businesses is N25m.

VAT Exemption on Food Items, Housing, Transportation

The Committee has proposed a Value-Added Tax exemption on all kinds of food except those in five-star hotels and restaurants with turnovers of over N50m annually. The exemptions also cover accommodation, health, and education, relieving the masses.

The committee proposes that the states and local governments share 90% of the allocation, leaving the federal government with 10% of the total share.

VAT Increase From 7.5% to 10%

The Committee proposed a Value-Added Tax increase from 7.5% to 10%, targeting 15% by 2030. This progressive tax will not adversely affect the lower income earners due to exemptions for food items, housing, transportation, and Value Added Tax increase from 7.5% to 10%, targeting 15% by 2030. 

Priority Sector Incentives to Replace Pioneer Status

The Committee proposed that the government identify different sectors with their peculiar conditions. 

The recommendation is a reformed system that is not prone to abuse, and which can provide real benefits to the economy. It allows for the assessment of the cost to the government and transparency in the process.

Reducing Tax on Consumption

The Committee proposes eliminating all taxes/levies on bicycles, wheelbarrows, trucks, motorcycles, and other consumption items to ease the burden on the masses. It has also emphasised the need for government at all levels to prioritise areas like education, health, welfare, and security to reduce multidimensional poverty in the country