May 1, 2024
Nigeria is set to streamline its tax system by reducing the number of levies by over 87%, making it easier for residents to pay taxes.
It is also aimed at helping to increase revenue, Bloomberg reports.
The Presidential Fiscal Policy and Tax Reforms Committee, led by Taiwo Oyedele, is seeking approval to retain eight key taxes: income tax, value-added tax, property tax, customs duties, excise tax, stamp duties, special levy, and harmonized levy.
Additionally, the social security contribution will be kept. The committee aims to complete the approval process by the end of the third quarter, with implementation expected to begin in January 2025.
Currently, Nigeria has over 60 taxes and one of the lowest tax-to-GDP ratios in the world at 10%.
President Bola Tinubu’s government aims to increase this to 18% by 2027 to address rising fiscal deficits, which reached 5.6% of GDP in 2023.
To achieve this, the committee recommends increasing value-added tax on non-essential items like mobile phones while reducing tax on essential items like food, housing, transportation, education, and health to protect vulnerable Nigerians.
The standard VAT rate is currently 7.5%. Oyedele believes the proposed reforms will significantly benefit the country, and the committee expects the new tax regime to be in place by January.
“The implementation is expected to kick in by January next year, if everything goes according to our plan,” Oyedele said during a presentation in Lagos on Thursday.
