- Recall that Oyedele on June 4 suggested a 5% cut in Corporate Income Tax to foster business growth and investment.
- He advocated lowering the corporate tax from 30% to 25% to incentivize entrepreneurship and attract investment for economic growth.
The national assembly is evaluating legislation to hike the value-added tax (VAT) from 7.5% to 10% by 2025, according to an exclusive story published by TheCable.
VAT, a tax imposed on goods and services at each production stage where value is enhanced, would undergo substantial modifications.
According to the executive bill seen by TheCable on Sunday, the VAT rate would rise to 10% by 2025, followed by a further increase to 12.5% between 2026 and 2029, and ultimately 15% from 2030 onward, as stated:
“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10%; (b) 2026, 2027, 2028, and 2029 years of assessment 12.5% (c) 2030 year of assessment and thereafter 15%.”
This proposed increase has sparked intense debate, with Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, stressing the necessity for a VAT hike on May 8.
However, former vice-president Atiku Abubakar vehemently criticized the proposed VAT increase on September 8, describing it as “regressive and punitive policy.”
But, the finance minister, Wale Edun, clarified on September 9 that the VAT rate remains unchanged, despite ongoing discussions.
In 2021, the International Monetary Fund (IMF) recommended that the federal government raise the VAT rate to at least 10% by 2022.
In related developments, the bill also proposes a reduction in corporate income tax (CIT) from 30% to 27.5% by 2025, and a further decrease to 25% by 2026.
Companies with an annual turnover of less than N20 million are exempt from paying CIT, according to the bill:
“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% in 2025 year of assessment, and (ii) 25% 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%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%.
“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 N20,000,000,000.00 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.”