The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, had said the committee would propose the removal of Value Added Tax on some basic amenities.
Oyedele on his X handle on Wednesday said basics like food, education and healthcare should not be taxed as he clarified claims that the committee was proposing further initiatives on taxes.
Speaking on multiple taxation, Oyedele said his committee had instead proposed, “Full input VAT credit for businesses to reduce their cost of doing business and minimise the strain on their cash flows. Remove VAT on an expanded list of basic food, educational and healthcare items to protect the poor. Harmonise all consumption taxes into one (VAT only) and adjust the revenue-sharing formula in favour of states to address a multiplicity of taxes.
“Removal of VAT on the export of service and intellectual property to promote non-oil exports, increase the threshold for VAT exemption for small businesses and enhance the VAT refund process to reduce the strain on working capital of businesses.
“Introduce VAT fiscalisation and electronic invoicing to curb evasion which makes honest businesses uncompetitive and consequential upward adjustment to the VAT rate on items not exempted to avoid a significant drop in revenue.”
Oyedele emphasized that the committee’s proposals seek to streamline the tax system, thus “Making it easier for businesses to comply and for the government to administer. By consolidating these taxes into a single, more efficient VAT system, we can reduce administrative costs and increase overall tax compliance.”
Subsequent proposals, Oyedele noted, will involve the reduction in companies’ income tax rate and an increase in exemption threshold for personal income tax were also discussed. Nigeria’s VAT rate is currently 7.5 per cent.
Highlighting challenges in the country’s tax system, he said, “Nigeria’s VAT system places a huge burden on businesses as they are not allowed to claim the input VAT incurred on services and assets. Some items which constitute basic consumptions (food, education, and healthcare) are liable to VAT rather than being exempt or zero-rated.”
He further assured that through the committee proposal, the era of multiple taxation will be eradicated.