The Federal Government expressed worry on Tuesday over Nigeria’s Value Added Tax(VAT), which is the lowest in the area of West Africa.
The administration emphasized the need for a shift in policy while labeling the situation as alarming, saying that the country’s VAT rate was less than 1% of Gross Domestic Product.
During the opening ceremony of a three-day workshop on the harmonization of Nigeria’s VAT Act with ECOWAS guidelines, Basheer Abdulkadir, Director of Tax Policy in the Federal Ministry of Finance, Budget, and National Planning, voiced his concern.
The initiative was put together by the ECOWAS Commission as part of the assistance package for West Africa’s tax transition.
The PATF aimed to improve management of domestic taxation and ensure better coordination in ECOWAS and West African Economic and Monetary Union regions.
Abdulkadir who stated that exemptions of VAT in Nigeria was not aligned with those of ECOWAS, called for the exemption of few products, goods and services from VAT, for poor households to benefit from VAT policy.
He said, “Our VAT performance or rate is still one of the lowest. Nigeria has a VAT of less than one per cent to the GDP and this is worrisome. Also, we have the lowest VAT within the sub-region with an average of 16 per cent, while VAT rate in Nigeria is 7.5 per cent. So we need a lot of policy changes on tax administration as we also need to come up with strategies to address some of these issues.
“Also, the exemptions of VAT in Nigeria is not aligned with those of ECOWAS and we know that these exemption are some of the issues to do with revenue mobilisation under the VAT. We need to align our exemptions with ECOWAS directive.”
