The Federal Government of Nigeria is planning to raise the Value Added Tax (VAT) to 15% specifically on luxury goods.
This announcement was made by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun.
He confirmed the plan during an investor meeting at the ongoing IMF/World Bank Annual Meetings in Washington, D.C.
Mr. Edun explained that a bill is currently under review by the National Assembly.
This bill aims to gradually increase VAT on luxury items while ensuring that essential goods used by vulnerable Nigerians remain exempt or are taxed at a zero rate.
“In terms of VAT, President Bola Tinubu’s commitment is that while implementing necessary reforms, the poorest and most vulnerable will be protected,” Edun stated.
He emphasized that the government is focused on increasing taxes on the wealthy while protecting the most vulnerable citizens.
The proposed changes will primarily affect luxury goods such as high-end electronics, designer clothes, and expensive jewelry.
Mr. Edun assured the public that a list of essential goods exempted from VAT would be made available soon.
“We want to make sure that the poor and average citizens are not burdened with higher taxes,” he said.
He reiterated that this tax reform is part of the government’s broader economic strategy to increase revenue and improve public services.
During the meeting, Mr. Edun also expressed optimism about Nigeria’s oil sector.
He cited improvements in security in oil-producing regions and new investments from major companies like Total and ExxonMobil.
These developments are expected to boost oil production and enhance foreign exchange inflows for the country.
“Improved security means we can expect better oil production, which is vital for our economy,” Edun said.
This increase in oil production is seen as crucial for Nigeria’s economic recovery.
The Minister also discussed the recent removal of fuel subsidies, which had been a significant expense for the government.
Edun explained that while the removal was announced earlier, full implementation only took effect last month.
He assured Nigerians that the savings from subsidy removal would have a noticeable impact on the economy in the coming months.
“We expect that the removal of fuel subsidies will lead to more efficient use of resources and improved economic performance,” he stated.
The government aims to use the savings to fund essential services and infrastructure projects.
When asked about Nigeria’s financial strategy, Mr. Edun disclosed that the government decided to issue domestic dollar bonds.
This decision was made despite the International Monetary Fund (IMF) advising against it.
Edun affirmed that Nigeria values its cooperative relationship with the IMF but retains autonomy over its financial decisions.
“We appreciate the IMF’s advice, but we must act in our national interest,” he explained.