Finance Minister and Coordinating Minister of the Economy, Wale Edun, has dismissed rumours of a potential hike in the Value-Added Tax (VAT) rate from 7.5% to 10%.
In a statement released Monday, Edun clarified that the VAT rate is still firmly set at 7.5%, as outlined in Nigeria’s tax laws.
“The current VAT rate is 7.5% and this is what the government is charging on a spectrum of goods and services to which the tax is applicable. Therefore, neither the Federal Government nor any of its agencies will act contrary to what our laws stipulate,” Edun affirmed.
He elaborated on the need for a balanced tax system, emphasizing that Nigeria’s tax framework operates on three key components: tax policy, tax law, and tax administration.
“The tax system stands on a tripod, namely tax policy, tax laws, and tax administration. All the three must combine well to give us a sound system that gives vitality to the fiscal position of the government,” the minister explained.
Edun addressed concerns from the public about policies that might seem burdensome, assuring that fiscal measures are designed to foster sustainable growth and reduce poverty, not the opposite.
“Our focus as a government is to use fiscal policy in a manner that promotes and enhances strong and sustainable economic growth, reduces poverty as well as makes businesses flourish,” Edun stated.
In response to media reports suggesting the government is imposing undue hardship on citizens, Edun refuted such claims.
Edun also pointed out recent government actions aimed at reducing the financial strain on Nigerians, particularly by eliminating import duties on key food items like rice, wheat, and beans.
“The imputation in some media reports on the issue of VAT and the opinion articles that have sprouted from them seem to wrongly convey the impression that the government is out to make life difficult for Nigerians. That is not correct. If anything, the Federal Government has, through its policies, demonstrated that it is committed to creating a congenial environment for businesses to thrive.
“In fact, it is on record that the Federal Government, as part of efforts to bring relief to Nigerians and businesses, recently ordered the stoppage of import duties, tariffs, and taxes on rice, wheat, beans, and other food items,” Edun noted.
Edun reiterated that the VAT rate remains at 7.5% and will continue to apply to all eligible goods and services.
“For emphasis, as of today, VAT remains 7.5% and that is what will be charged on all the goods and services that are VAT-able,” he concluded.
