A proposed bill to increase Value-Added Tax (VAT) from 7.5 per cent to 10 per cent has been put before the National Assembly for consideration.
In the executive bill reported by TheCable on Sunday, 13 October, the National Assembly intends to raise the tax rate to 10 per cent by 2025.
The lawmakers also mull subsequently increasing VAT to 12.5 per cent by 2026 through 2029, according to the document.
Notably, on 08 May 2024, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, had said the VAT rate needs to be increased.
Meanwhile, the bill also proposes a reduction in the corporate income tax (CIT) to 27.5 percent by 2025 — down from 30 percent — and a further cut to 25 percent by 2026.
Companies with less than N20 million turnover are exempted from paying the CIT, according to the bill.
The document reads: “VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10 percent; (b) 2026, 2027 2028 and 2029 years of assessment 12.5 percent (c) 2030 year of assessment and thereafter 15 percent.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of; (a) a small company, at zero percent; and (b) any other company, at the rate of-(i) 27.5 percent in 2025 year of assessment, and(ii) 25 percent from 2026 year of assessment.
“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15 per cent, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15 percent.
“The provisions of this section shall apply to (a) a company that is a constituent entity of an MNE group; and (b) any other company with an aggregate turnover of N20 billion and above in the relevant year of assessment.
“The companies covered under this section and the determination of the additional tax payable shall be in accordance with regulations issued by the Service.”
