Officials of the IMF have advised the federal government to increase Value Added Tax (VAT) in the country to 10 per cent come 2022, from the 7.5 per cent it is presently, once economic recovery takes root.
They also recommended that VAT in the country should be 15 per cent by 2025. The IMF stated this in an article posted on its website yesterday, titled: “Five Questions About Nigeria’s Road to Recovery,” that was authored by some staff of its African Department.
They noted that Nigeria has one of the lowest revenue levels as a share of GDP worldwide, stating that a large share of the country’s revenue is spent on the country’s public debt service payments, leaving insufficient fiscal space for critical social and infrastructure spending and to cushion an economic downturn.
In this context, it noted that mobilising revenues through efficiency-enhancing and progressive measures ought to be a top near-term priority.
“Revisiting tax exemptions and customs duty waivers, increasing and broadening the base for excise taxes, developing a high-integrity taxpayer register, enhancing digital infrastructure, and improving on-time filing and payment are important measures.
“Once economic recovery takes root, Nigeria will need to increase the value-added tax rate to at least 10 percent by 2022 and 15 percent by 2025—the average in countries belonging to the Economic Community of West African States—to create effective fiscal space,” they stated.