BREAKING: FG Debunks Alleged Plan to Increase VAT to 10% amid Economic Hardship

• Finance Minister Wale Edun has denied reports of a planned increase in VAT from 7.5% to 10%, stating that the current rate remains unchanged
• The coordinating minister of the economy emphasised that the government's focus is on promoting economic growth, reducing poverty, and enhancing business growth through fiscal policies
• Edun's statement comes after former VP Atiku criticised President Tinubu's purported plan to raise VAT

Abuja, FCT - The minister of finance and coordinating minister of the economy, Wale Edun, on Monday, September 9, debunked reports of a planned increase in the Value-Added Tax (VAT) rate from 7.5% to 10%.

In a statement made available to Legit.ng, Edun affirmed that the VAT rate remains unchanged at 7.5%, as contained in relevant tax laws and chargeable on goods and services.

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He emphasised that the government will not act contrary to the stipulations of the law.

“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," the minister said.

Edun highlights policies aimed at boosting economy

Edun highlighted the government's focus on using fiscal policy to promote strong and sustainable economic growth, reduce poverty, and enhance business growth.

He noted that recent policies, such as the stoppage of import duties, tariffs, and taxes on food items, demonstrate the government's commitment to creating a favourable business environment.

“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 to flourish," the minister added.

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“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. "

VAT rate: Edun clarifies misconceptions

The minister dismissed misconceptions that the government aims to make life difficult for Nigerians, emphasising that the government's policies are designed to support businesses and citizens.

He reiterated that, as of today, September 9, the VAT rate remains 7.5% and will be charged on all applicable 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,” Edun said.

VAT remains 7.5%: No cause for alarm

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Aderonke urged Nigerians to disregard the reports, saying the federal government was working to fix the economy and improve citizens' livelihoods.

“There is no cause for alarm, Nigerians should be rest assured that the FG is working hard to fix the economy and improve the livelihood of the citizens. Please ignore such reports it is not true," she reiterated.

Alleged VAT increase: Atiku criticises Tinubu

Legit.ng notes that the FIRS's statement was released amid the claim by former vice president Atiku Abubakar and the chieftain of the opposition Peoples Democratic Party (PDP).

In a post on X on Sunday, September 8, Atiku spoke out against President Bola Tinubu's purported decision to raise the VAT rate from 7.5% to 10%, citing concerns that it would exacerbate the country's economic woes. Atiku argued that the move, combined with a recent fuel price hike, would deepen the domestic cost-of-living crisis and hinder Nigeria's already fragile economic growth.

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Atiku also criticised Tinubu's policies as regressive and punitive, alleging that they disproportionately burden the poor while ignoring the extravagant spending of the president and his entourage.

The FIRS has, however, debunked the VAT increase claim.

What is VAT?

Value Added Tax is a consumption tax paid when goods are purchased and services rendered.

It is a multi-stage tax. VAT is borne by the final consumer. All goods and services (produced within or imported into the country) are taxable except those specifically exempted by the VAT Act. VAT is charged at a rate of 7.5% in Nigeria.

Farmers, SMEs to stop paying withholding tax - FG

Meanwhile, to lessen the tax burden on enterprises, the federal government recently approved exempting manufacturers, farmers, and small businesses from paying withholding tax.

Important modifications to the previous tax system were also implemented, including lower rates for companies with narrow profit margins and steps to prevent tax cheating.

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Taiwo Oyedele, the chairman of the presidential committee on Fiscal Policy and Tax Reforms, made the announcement.

Source: Legit.ng