This archive report was first published on 13 September 2019.
On September 13, 2019, Nigeria's finance minister, Zainab Ahmed, announced plans to increase value-added tax (VAT) on goods to 7.2 per cent, up from 5 per cent, in a bid to reduce the country's reliance on crude sales and boost non-oil revenues.
The current VAT rate of 5 per cent is one of the lowest in the world, and the proposed increase must be approved by parliament before it can become law. President Muhammadu Buhari's government has repeatedly said it wants to boost non-oil revenues, as oil sales make up 90 per cent of foreign exchange receipts.
According to Ahmed, the cabinet approved the proposed VAT rise when it met on Wednesday, citing the need for states and local governments to have additional revenue to meet the obligations of the minimum wage. Nigeria's minimum wage was increased in April to 30,000 naira ($98) a month from 18,000.
As part of a broader drive to increase tax revenues, Nigeria's tax chief told Reuters last week that the country collected 5.32 trillion naira ($17.39 billion) in taxes in 2018 and is targeting 8.9 trillion naira this year.
