The Nigerian government is set to raise the Value Added Tax (VAT) to 15%, targeting primarily luxury goods, according to Mr Wale Edun, the Minister of Finance and Coordinating Minister of the Economy. This announcement came during an investor meeting at the ongoing IMF/World Bank Annual Meetings.
Edun explained that a bill currently under review by the National Assembly aims to gradually increase VAT on luxury items, while essential goods consumed by vulnerable populations will either remain exempt or attract 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,” he stated. He further clarified that “the bills going through the National Assembly will raise VAT for the wealthy on luxury goods while exempting or applying a zero rate to essential items used by the poor and average citizens.”
The Minister assured attendees that a comprehensive list of essential goods exempt from VAT would be made public soon.
In addition to tax reforms, Edun expressed optimism regarding Nigeria’s oil sector, highlighting improved security in oil-producing regions and fresh investments from major companies like Total and ExxonMobil. He noted that these developments are expected to boost oil production and enhance foreign exchange inflows into the country.
On the topic of fuel subsidies, Edun explained that while subsidy reforms were announced earlier, full implementation only began last month. He emphasized that the economic benefits of these reforms would become more apparent in the coming months as the government continues to navigate fiscal challenges.
When asked about Nigeria’s financial strategy, Edun revealed that the government has opted to issue domestic dollar bonds, despite receiving counsel from the International Monetary Fund (IMF) against such a move. He affirmed that Nigeria maintains a cooperative relationship with the IMF while retaining autonomy over its financial decisions.
As Nigeria looks to implement these reforms, the government’s focus on balancing fiscal responsibility with the protection of its most vulnerable citizens remains a central theme in its economic strategy.