The federal government is proposing to increase the Value Added Tax (VAT) from 7.5 percent to 10 percent.
The executive bill to effect the increase and make it legal is already before the National Assembly, Naija News understands.
According to a report published by The Cable on Sunday, the National Assembly is seeking to raise VAT to 10 percent by 2025. It also seeks to increase the VAT to 12.5 percent by 2026 through 2029, and 15% as from 2030 according to the document seen by the platform.
“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10%; (b) 2026, 2027 2028 and 2029 years of assessment 12.5% (c) 2030 year of assessment and thereafter 15%,” the document reads.
It would be recalled that the chairman of the presidential committee on fiscal policy and tax reforms, Taiwo Oyedele, had on May 8, said the VAT rate needs to be increased.
However, the Minister of Finance, Wale Edun, on September 9, said the VAT rate has not been changed.
Meanwhile, the bill also proposes a reduction in the Corporate Income Tax (CIT) from 30 percent to 27.5 percent by 2025, and a further cut to 25 percent by 2026.
According to the bill, companies with less than ₦20 million turnover are exempted from paying the CIT.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of; (a) a small company, at zero percent; and (b) any other company, at the rate of-(i) 27.5% in 2025 year of assessment, and(ii) 25% from 2026 year of assessment,” the document added.
“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%.
“The provisions of this section shall apply to (a) a company that is a constituent entity of an MNE group; and (b) any other company with an aggregate turnover of N20,000,000,000.00 and above in the relevant year of assessment.
“The companies covered under this section and the determination of the additional tax payable shall be in accordance with regulations issued by the Service.”
On June 4, Oyedele had said the presidential committee on fiscal policy and tax reforms proposed a reduction of the CIT by 5 percent in order to encourage businesses and investors.
The federal government, earlier in October, also released the gazetted withholding tax regulations expected to take effect from January 1, 2025.
