Value- added tax (VAT) rates need to be raised, the presidency’ s Committee on Fiscal Policy and Tax Reforms has announced. This was revealed by committee chairman Taiwo Oyedele, who also informed Nigerians that the VAT revenue- sharing formula will be revised.
He delivered a speech earlier this week during a committee- organized session on policy exposure and impact assessments. The current VAT rate in Nigeria is 7. 5 percent.
The committee has suggested evaluating state and local governments’ share of VAT collection up to 90%, according to tax expert Oyedele. Section 40 of the VAT Act specifies that the states receive fifty percent of the tax revenue, local governments receive thirty- five percent, and the federal government receives fifteen percent.
Oyedele, however, stated that the committee is suggesting that the federal government’ s portion be decreased from fifteen percent to ten percent. ” We are suggesting that the share from the federal government be lowered to 10% from 15%. States would receive a larger part, but they will still divide 90% with local governments, he stated.
According to Oyedele, the committee suggested changing the VAT distribution mechanism because it is a state tax. States were responsible for collecting sales tax in 1986.
” When the military implemented the Value Added Tax (VAT) in 1993, they eliminated sales tax and declared that they would collect VAT and repay 15% of the total as collection costs. This is how the current 15% levy came to be. But we believe it to be excessive, ” he remarked.
According to Oyedele, ” we have to make it transparent and neutral, and this is what over 100 countries with VAT are doing. ” ” If I just stop at this, many states would go bankrupt since VAT collection will fall down by more than 50% and that won’ t even fly in Nigeria, a country where services account for more than 50% of the GDP.
Therefore, the VAT rate needs to be raised. We would see to it that businesses are unaffected. The only thing to consider is that basic expenses such as food, lodging, medical care, and education will all be VAT- free. Thus, no VAT for small firms and the impoverished.
Therefore, the VAT rate needs to be raised. We would see to it that businesses are unaffected. The only thing to consider is that basic expenses such as food, lodging, medical care, and education will all be VAT- free. Thus, no VAT for small firms and the impoverished.
Other customers will pay a little bit extra, according to Oyedele. Businesses that we have spoken to about it have agreed not to raise the price of their products. We want to ensure that no one raises the price of goods when we implement the VAT reform.
” With the business sector, we will sort out the math, ” he declared. Additionally, Oyedele stated that giving each state sole custody of its collections would probably lead to anarchy.
A lot of Nigerians have reacted to this news, someone said; ” hmmm, tax tax tax! ! very soon we will start paying tax for eating in our various houses, or for laughing or even crying, rubbish govt”
” With the business sector, we will sort out the math, ” he declared. Additionally, Oyedele stated that giving each state sole custody of its collections would probably lead to anarchy.
A lot of Nigerians have reacted to this news, someone said; ” hmmm, tax tax tax! ! very soon we will start paying tax for eating in our various houses, or for laughing or even crying, rubbish govt”
