The federal government would apply a 15 per cent Value Added Tax (VAT) on luxury products, according to Mr Wale Edun, Minister of Finance and Coordinating Minister of the Economy. He also stated that the complete elimination of subsidies went into force last month.
In response to enquiries from investors during a meeting held on the margins of the ongoing IMF/World Bank Annual Meetings in Washington, DC, he stated that a law pending in the National Assembly would force wealthy Nigerians to pay a VAT rate that would eventually rise to 15%.
However, he underlined that the weak and impoverished will pay reduced or no VAT on necessities.
He stated that the public will have access to the list of such necessities that would be exempt from VAT soon enough.
His words: “In terms of VAT, the commitment of President Bola Tinubu is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected.
“And in the case of VAT, it is a very efficient tax for reasons well-known but it is also a tax that is targeted. So the bills going through the National Assembly in terms of VAT will raise VAT for the wealthy on luxury goods while at the same time seeking to exempt or seek a zero rate for the essentials and for what the poor and the average persons will purchase.
“Those bills will single items for zero rate of VAT while hitting luxuries with a higher rate of VAT.”
With improved security in the oil-producing regions and new investments, particularly those announced by Total and ExxonMobil, Edun was confident that the oil industry was poised to boost the accretion of foreign currency (FX) into the market.
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