‘New VAT rate for firms with over N25m turnover’

The new proposed 7.5 percent Value Added Rate (VAT) will only apply to businesses with turnover of N25million and above.

The Director General of Budget Office, Ben Akabueze disclosed this at the 25th Nigerian Economic Summit recently held in Abuja.

He said the new VAT is consumption tax, and it has minimal engagement with the poor.

Akabueze who noted that the VAT increment has already been settled, said some critical consumables are exempted from the VAT increase.

He said it is very important to improve tax levels in Nigeria, considering the country is one of the lowest in terms of taxation.

He also said that the existing VAT law has no threshold for applicability adding that petty business owners are not to be taxed.

“This means that the woman on the road side is supposed to be charged VAT, but this new act has established a treshold hold which says it shall be applied to only businesses with a turnover of over N25 million and above, so small businesses are exempted.” Akabueze explained.

“The question of increasing the VAT rate in Nigeria is a matter that has been long settled in past summits about the necessity to increase and improve taxation through consumption taxes. Indeed, about 9 years ago that was supposed to have happened, two things that were supposed to happen simultaneously were VAT increase from 5 to 10 percent and a reduction in personal income tax rate,” he said.

He also explained thatVAT is consumption tax and several Nigerians hardly engage in any activity where VAT can be charged.