Barely a month after the Taiwo Oyedele-led Presidential Fiscal Policy and Tax Reforms Committee disclosed it was proposing a law to the National Assembly to increase Value Added Tax (VAT) from the current 7.5 per cent to 10 per cent, details emerged yesterday that the lawmakers are considering a bill on the proposed hike.

VAT refers to a consumption tax on goods and services levied at each stage of the supply chain where value is added.

Though the Federal Government had denied Oyedele’s claims, but an executive bill seen before the National Assembly seeking to raise the tax rate to 10 per cent by 2025 confirms otherwise.

The legislature also intends to increase the VAT to 12.5 per cent by 2026 through 2029, according to the document sighted yesterday.

“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.

Meanwhile, the bill also proposes a reduction in the corporate income tax (CIT) to 27.5% by 2025 — down from 30% — and a further cut to 25% by 2026.
Companies with less than N20 million turnover are exempted from paying the CIT, according to the bill.

Oyedele, however, noted that his committee was working to consolidate multiple taxes in Nigeria to ensure tax reduction.

“The law we are proposing to the National Assembly has the rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.

“While doing that, we have corresponding reduction in personal income tax. Anyone earning N1.5 million a month or less will see their personal income tax come down. Firms will have income tax rate come down by 30% over the next two years to 25%.”

That is a significant reduction.

“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will go down to 2& in the next few years.”