The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has announced that the committee is proposing a law to increase Value Added Tax (VAT) from the current 7.5% to 10%.
The proposed law, which will be submitted to the National Assembly, is part of broader efforts to address the enormous challenges in Nigeria’s tax revenue system.
Speaking during an interview on Channels TV’s Politics Today, Oyedele disclosed that the committee is also working to consolidate multiple taxes in Nigeria to reduce the overall tax burden.
“We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis,” Oyedele explained.
He further outlined the three broad mandates of the committee: governance, revenue transformation, and management of government assets.
According to him, the proposed VAT increase will take effect in 2025, with subsequent increases already indicated in the draft law.
“The law we are proposing to the National Assembly has the rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in,” he stated.
In addition to the VAT increase, the committee is also proposing a reduction in personal income tax for individuals earning about ₦1.5 million or less per month, as well as a decrease in the corporate income tax rate from 30% to 25% over the next two years.
“While we are doing that, we have a corresponding reduction in personal income tax. Anybody that is earning about ₦1.5 million a month or less, they will see their personal income tax come down. Companies will have income tax rate come down by 30% over the next two years to 25%. That is a significant reduction,” Oyedele added.
He also mentioned that various other taxes, such as the IT levy and education tax, will be consolidated into a single tax, initially set at 4%, which will be reduced to 2% over the next few years.
