Federal government proposal to hike VAT from 7.5% to 10% will be phased
The proposed 2.5% VAT increase in Nigeria is likely to be phased in according to the Presidential Tax and Fiscal Policy Reforms Committee.
This follows a call by the Minster of Finance to hike VAT from 7.5% to 10%; the new government if facing calls from several quarters to increase VAT to nearer the regional average. Nigera, the largest economy in Africa,raised from 5% to 7.5% in 2020.
Surrounding countries, Benin and Cameroon, have standard VAT rate of 18% and 19.5%, respectively.
Nigerians voted to elect a new president on 25 February and he will be sworn in on 29 May 2023. Nigeria’s economic growth slowed to 3.52% in the fourth quarter from 3.98% a year earlier as widespread flooding destroyed farms, oil production declined and industry was squeezed by rising costs. This has put pressure on government receipts leading to Value Added Tax rate rise calls.
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