The
President Muhammadu Buhari administration has unveiled concrete plans
to revise Nigeria's tax policy after an economic meeting.
Kemi Adeosun
The Federal Government plans to raise the value-added tax (VAT) on
luxury items — subject to the approval of the national assembly.
Finance minister Kemi Adeosun said the cabinet, presided over by
Vice-President Yemi Osinbajo, has approved the revised national tax
policy to address low taxation in the country.
Nigerians currently pay 5% VAT, one of the lowest in the world, introduced in 1994 by the military government.
According to Adeosun, “What the (review) committee report has shown is that we should look at actually increasing VAT on some luxury items.
"At 5% we have lowest VAT. And while we don’t think VAT should
be increased on basic items, if you are going to drink champagne, for
instance, in the UK you drink champagne the VAT is 20%, so why should it
be 5% in Nigeria.
"So they have made recommendations that we should pull out some
luxury items and increase VAT on those items immediately. And I think
that is a very valid and sensible suggestion which we are going to take
to the national assembly to see how we can implement it.
"But as far as basic goods are concerned, there will be no tax
increase. I believe it is only fair that when you consume luxury goods
you should pay a little bit more. The National Assembly will decide the
percentage.”
In the UK, 20% VAT is imposed on all the affected goods and
services and is completely different from luxury tax. In November 2014,
Ngozi Okonjo-Iweala, then finance minister, announced that private jets,
yachts, champagne and a host of other the luxury goods would be
specially taxed.
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