Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee stated on 5 September 2024 that the committee proposes the elimination or reduction of VAT on essential items like food, housing, and public transportation.

In a post on X, the Chairman said the Committee has proposed reducing the VAT rate to 0% on food, health, and education and exempting rent, transportation, and small businesses. In addition, the Committee proposed plans at the National Assembly to raise the standard value added tax (VAT) rate from 7.5% to 10%. The standard rate was last raised from 5.0% to 7.5% on 1 February 2020.

Other proposed provisions related to the VAT regime are:

  • Discontinue with other consumption taxes and charge only VAT where applicable;
  • All businesses will be able to recover VAT on their assets and services, thereby lowering their overall costs and reducing inflation;
  • Over 97% of SMEs will be exempted from charging VAT on their sales;
  • VAT refunds will be faster without the need for extensive tax audits to help business cash flow;
  • Sharing of VAT revenue to and among states to be more equitable;
  • The export of services and intellectual properties will attract 0% VAT to facilitate export growth.

Businesses will also get full credit for the VAT they pay on their assets and services, lowering their overall costs and moderating inflation. Furthermore, the Committee outlined its strategy to consolidate various taxes in Nigeria, aiming to alleviate the overall tax burden.