Nigeria’s Finance Minister Kemi Adeosun recently announced that the cabinet had approved the amended national tax policy.
Nigeria has one of the lowest VAT rates at just 5%, which was introduced in 1994 and currently, those taxes represent only 6% of the country gross domestic product (GDP), making it one of the lowest tax to GDP ratio in the world. Also, the country has strong challenges with collecting taxes because a lot of small businesses are not VAT registered.
In order to increase its VAT revenues, Ms Adeosun has stated that the government is seeking to identify luxury goods and raise the value-added tax (VAT) on them while maintaining the current VAT rate for non-luxury items. To aid this initiative, Ms Adeosun stated that an office of tax simplification and tax policy implementation committee would be established. The proposal’s they recommend will come into force once it has been reviewed by the National Assembly, which will decide the new VAT rate on identified luxury items.