FG Says Reports of Another VAT Hike to 10.0% Untrue

November 5, 2020
value added tax VAT

By Dipo Olowookere

The federal government has emphasised that it is not planning to increase the value-added tax (VAT) by another 2.5 per cent next year.

Last year, the central government announced that it was raising the value of the tax to 7.5 per cent from 5.0 per cent from 2020 and this action made businesses to increase the price of their products and services.

While Nigerians are still trying to adjust to the harsh effect of this VAT increment, reports emerged on Wednesday that the government was planning to add another 2.5 per cent to the tax to make it 10.0 per cent so as to boost revenue.

But the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, while addressing the issue before at the Senate Committee on Finance in Abuja on Thursday, said the reports are untrue.

According to her, the 2021 budget put the VAT at 7.5 per cent just as the crude oil benchmark was pegged at $40 per barrel despite some analysts projecting the price at $50 for the year.

“As for the finance bill, we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of recovery, not only for the government but businesses as well,” the Minister told the committee headed by Mr Adeola Olamilekan.

The decision of the federal government to increase the VAT this year to 7.5 per cent greatly affected the prices of goods and services in Nigeria.

For subscribers of pay-TV, they had to pay more as operators increased the prices of their bouquets, while electricity consumers were also not spared by the 11 distribution companies in the county, who increased the tariff and cost of meters to customers.

To increase the VAT, the executive will have to present a finance bill to the National Assembly for approval and as the Minister said, what is being drafted for next year is the current rate of 7.5 per cent and not the reported 10.0 per cent.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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