The Federal Government has expressed concern over the rating of Value Added Tax (VAT) in Nigeria as the lowest in the West African region.
Director of Tax Policy in the Federal Ministry of Finance, Budget and National Planning, Basheer Abdulkadir, who described the development as worrisome, stressed the need for a change in policies.
Speaking at the opening event of a three-day workshop on the harmonisation of Nigeria’s VAT Act with Economic Community of West African States (ECOWAS) directives, he added that the country’s VAT rate was less than one per cent to the Gross Domestic Product.
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Information Nigeria reports that the programme was organised by the ECOWAS Commission under the context of implementation of support Programme for Tax Transition in West Africa.
The Programme aims 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.
“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.” he said.
