Nigeria’s National Assembly is reviewing a bill that aims to raise the Value-Added Tax (VAT) from 7.5% to 10% by 2025, according to a report by TheCable, citing an executive bill to be submitted to the legislators.
The proposal also outlines a further increase in VAT to 12.5% between 2026 and 2029, with a potential rise to 15% by 2030.
This tax hike aligns with earlier statements made by the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele who advocated for a VAT increase on May 8, 2024.
The bill also introduces a significant reduction in corporate income tax (CIT), from 30% to 27.5% by 2025, and further to 25% by 2026.
Companies with annual turnovers below N20 million will remain exempt from CIT under the proposed law.
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The draft legislation outlines the tax rate structure, stating:
“VAT shall be charged on taxable supplies at 10% for the 2025 assessment year, 12.5% for 2026 through 2029, and 15% from 2030 onward.”
In addition to VAT adjustments, the bill proposes a minimum effective tax rate of 15% for large multinational enterprises (MNEs) and other companies with turnovers exceeding N20 billion.
Should a company’s effective tax rate fall below this threshold, it would be required to pay additional tax to meet the 15% minimum.
This move, part of broader fiscal reforms, is designed to boost government revenue while easing the tax burden on smaller businesses.
(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)
