Following the dwindling global oil prices and the economic crisis gnawing at the country, the government of Nigeria is making plans to change the nation’s tax regime in a bid to shore up diminishing revenue.
According to The Punch Newspaper, as recently suggested by the International Monetary Fund, Managing Director, Ms. Christine Lagarde, there are strong indications that the federal government will increase Value Added Tax.
During her visit to the country early this month, Lagarde, who urged the increase of VAT from 5 per cent also said the IMF did not support foreign exchange restrictions.
Mrs. Kemi Adeosun, the Minister of Finance, also said the FG plans to borrow up to $5bn from multiple sources, including the Eurobond market, to plug its budget deficit.
Confirming this development, the Vice President Yemi Osinbajo, who said changes to taxation were being considered, in a televised interview with CNBC, said: “We are looking at increasing our tax coverage.
“VAT, for instance — we have been doing just about 20 per cent coverage. We think that just by increasing coverage, we could do much more, and so we could earn more in terms of local resources,”
Both economic and financial analyst have, however, predicted that the move to increase VAT would put further untold hardship on Nigerians, as it would cause increase in the prices of goods and services, among other implications.
VAT is a consumption tax payable on the goods and service consumed by any person, whether government agencies, business organisations or individuals. It is currently levied at the rate of five per cent in the country.