More Woes For Nigerians As Tax Committee Recommends VAT Hike

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A revision to the Value Added Tax (VAT) has been suggested by the Presidential Committee on Fiscal Policy and Tax Reforms.

In addition, committee chairman Taiwo Oyedele proposed that the methodology for VAT revenue-sharing be examined.

He spoke at a policy exposure and impact assessment session organised by the committee.Oyedele however allayed fears over the impending review, saying it would not affect the poor and the small business owners.

The Federal Government had increased VAT from five per cent to 7.5 % in February 2020 following the passage of the 2020 Finance Act.

The Tax Committee Chairman however assured that businesses would not increase their products as a result of the increase.

He said, “Nigeria’s economy is more than 50 percent in services and if I just stop at this, many states will be broke because VAT collection will go down by more than 50 percent and it won’t even fly.“

So we therefore need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services and accommodation will carry zero percent VAT. So for the poor and small businesses, no VAT.

“We have spoken to businesses about it and they won’t increase the product price. We want to make sure when we do VAT reform, no one will increase the price of commodities. We will work the mathematics with the private sector.”

Oyedele added, that the committee has also proposed a review of the state and local governments’ share of VAT revenue to 90 percent as well as reducing the federal government’s share from 15 percent to 10 percent.

Section 40 of the VAT Act provides that the federal government gets 15 percent, states share 50 per cent, and local governments share the balance of 35 per cent.


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