The Federal Executive Council (FEC) which President Muhammadu Buhari presided over on Wednesday, approved the increment of value-added tax (VAT) rate from 5 percent to 7.2% percent in a bid to increase government revenues.
The Minister of finance, budget and national planning, Mrs Zainab Ahmed confirmed the increment at the end of the cabinet meeting. The new rate will not be implemented immediately until the act was reviewed by the national assembly.
This represents a 44% increase (VAT has remained at 5% since January 1, 1994, when it became active).
We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed to increase the VAT rate from 5 percent to 7.2 percent.
This is important because the federal government only retains 15 percent of the VAT – 85 percent is actually for the states and local governments and the states need additional revenue to be able to meet the obligations of the minimum wage.
This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT act. So, it is not going to be implemented immediately until the act is reviewed.” Zainab Ahmed said.
The proposed increment has drawn condemnation and outrageous comments among Nigerians on Social media.
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