Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has announced plans to propose legislation to the National Assembly aimed at increasing the Value Added Tax (VAT) from the current rate of 7.5% to 10%.
In an interview on Channels TV’s Politics Today, Oyedele highlighted the pressing need for tax reforms in Nigeria, citing significant challenges in the country’s tax revenue system. He emphasized that the overall fiscal situation is in crisis, affecting both tax and non-tax revenue streams.
“The revenue profile of the country is abysmally low,” Oyedele stated, adding that even if the entire revenue were dedicated to infrastructure, it would still fall short. He outlined the committee’s three broad mandates: improving governance and financial management, transforming revenue generation, and optimizing government assets.
The proposed tax law, which will be submitted to the National Assembly, includes a phased increase in VAT starting in 2025, with additional increases planned in subsequent years. Oyedele expressed uncertainty about the timeline for the law’s passage but stressed its importance for the nation’s fiscal health.
In conjunction with the VAT increase, the committee is also proposing reductions in personal income tax for individuals earning up to N1.5 million per month, along with a decrease in corporate income tax rates from 30% to 25% over the next two years.
Furthermore, Oyedele noted that the committee aims to consolidate various existing taxes, such as the IT levy and education tax, into a single tax structure. Initially, this consolidated tax would be set at 4%, with plans to reduce it to 2% in the coming years.
These proposed reforms reflect a comprehensive approach to addressing Nigeria’s fiscal challenges and enhancing the efficiency of its tax system.
