Following the successful passing of the Minimum Wage Bill by the Senate yesterday, 19th of March 2019, the Chairman of the Federal Inland Revenue Service, Mr Babatunde Fowler has informed Nigerians to be ready for an increase in VAT rate this year. This statement was made in an explanation given to the Senate Committee on Finance, on the details of the 2019-2021 Medium-Term Expenditure Framework and Fiscal Strategy Paper, which is expected to be the benchmark for the 2019 budget deliberations.
According to Mr Fowler and Senator Udoma, this increase was necessary for the government to fund the new wage bill. The FIRS Chairman also backed his position by the fact that the VAT rate in Ghana and other West African countries are higher than that of Nigeria, adding that the increment will also affect both the Company Income Tax and the Petroleum Profit Tax.
The proposed increase, when implemented will increase the current VAT rate from 5% to at least 6.75 or 7.25%, which translates to an increase of between 35 and 50 percent.
We will update you with more information as developments arise.
Should you require any clarification on this, please contact any of the following:
uche.onyegide@drudgeconsulting.com
ugochukwu.enebuse@drudgeconsulting.com