The National Assembly is deliberating on a new bill proposing an increase in the value-added tax (VAT) from 7.5% to 10% by 2025, with further increments planned in subsequent years.
According to a draft of the bill seen on Sunday, the VAT rate would rise to 12.5% between 2026 and 2029, and reach 15% by 2030. The bill aims to adjust VAT in stages, impacting goods and services at every level of the supply chain where value is added.
“VAT shall be charged on the value of all taxable supplies at the following rates: (a) 2025 year of assessment, 10%; (b) 2026–2029 years of assessment, 12.5%; (c) 2030 year of assessment and thereafter, 15%,” the document reads.
The proposal comes amid earlier discussions on tax reforms. On May 8, Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, recommended an increase in VAT. In response, former Vice President Atiku Abubakar criticized the plan on September 8, calling it a “regressive and punitive policy.”
However, Wale Edun, the Minister of Finance, clarified on September 9 that no VAT changes had yet taken effect. Previously, the International Monetary Fund (IMF) had recommended raising VAT to 10% by 2022 to support fiscal sustainability.
The bill also proposes a reduction in the corporate income tax (CIT) rate from the current 30% to 27.5% by 2025, with a further decrease to 25% in 2026. Companies with annual turnovers below ₦20 million would be exempt from CIT payments.
“Tax shall be levied, for each year of assessment, in respect of total profits of every company, as follows: (a) small companies at 0%; (b) other companies at 27.5% for 2025, and 25% from 2026,” the document states.
Additionally, the bill introduces a minimum effective tax rate of 15% for certain companies, including multinational enterprises (MNEs) and firms with annual turnovers of ₦20 billion or more. Companies falling below this threshold would be required to “recompute and pay an additional tax to bring their effective tax rate to 15%.”
These tax changes align with recommendations from the presidential committee on fiscal policy, which, on June 4, proposed reducing CIT from 30% to 25% to attract businesses and investments. The federal government also released gazetted withholding tax regulations to take effect from January 1, 2025.
