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FG Proposes VAT Increase to 10% by 2025, Gradual Hike to 15% by 2030
The federal government is planning to raise the Value Added Tax (VAT) from 7.5 percent to 10 percent.
EKO HOT BLOG reports that an executive bill to formalize the increase has already been submitted to the National Assembly.
According to a Sunday report by The Cable, the proposed legislation seeks to gradually raise the VAT rate to 10 percent by 2025. It further aims to increase the VAT to 12.5 percent between 2026 and 2029, and eventually to 15 percent starting in 2030, based on the document obtained by the platform.
The document outlines the proposed VAT rates as follows: “VAT shall be charged on all taxable supplies at these rates: (a) 10% in 2025; (b) 12.5% in 2026 through 2029; (c) 15% from 2030 onward.”
It is worth noting that Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, stated on May 8 that VAT rates should be increased. However, on September 9, Finance Minister Wale Edun clarified that no VAT hike had been implemented yet.
The bill also includes a proposal to reduce the Corporate Income Tax (CIT) rate from 30 percent to 27.5 percent by 2025, with a further decrease to 25 percent by 2026. Companies with annual turnovers below ₦20 million would be exempt from paying CIT.
As outlined in the document: “Tax will be imposed based on the total profits of each company as follows: (a) small companies, at zero percent; (b) other companies, at 27.5% in 2025 and 25% from 2026 onward.”
Additionally, companies with an effective tax rate below 15 percent would be required to recalculate and pay additional tax to meet the 15 percent minimum, with this provision applying to companies in multinational enterprise (MNE) groups and those with annual turnovers exceeding ₦20 billion.
Earlier this year, on June 4, Oyedele stated that the committee proposed the CIT reduction to promote business growth and investment. Moreover, in October, the federal government issued gazetted withholding tax regulations, set to take effect on January 1, 2025.
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