A plan that would raise the Value-Added Tax, or VAT, from 7.5 percent to 10 percent is being considered by the National Assembly. The National Assembly plans to raise the tax rate to 10 percent by 2025, according to the executive bill that TheCable seen yesterday. According to the document, the legislature also plans to raise the VAT to 12.5% by 2026 or 2029. Recall that Mr.
Taiwo Oyedele, the head of the Presidential Committee on Fiscal Policy and Tax Reforms, stated that an increase in the VAT rate was necessary on May 8, 2024. In addition, the plan suggests lowering the corporate income tax (CIT) from 30 percent to 27.5 percent by 2025 and then to 25 percent by 2026.
The bill exempts companies with a turnover of less than N20 million from paying the CIT. The document states that VAT will be applied to the value of all taxable supply at the following rates: (a) 10% in the year of assessment 2025; (b) 10% in the years of assessment 2026, 2027, 2028, and 2029. 12.5% (c) in the evaluation year of 2030, and then 15% after that.
For each assessment year, tax will be imposed on the entire profits of all companies. For small businesses, this tax will be zero percent; for other businesses, it will be twenty-five percent in the assessment year of 2025 and twenty-five percent in the assessment year of 2026.
“Regardless of any clause in this Act or any other legislation, if a company’s effective tax rate is less than 15% in any assessment year, it must recalculate and pay an additional tax to bring its effective tax rate up to 15%.”
“A company that is a constituent entity of an MNE group and (b) any other company with an aggregate turnover of N20 billion or more in the relevant year of assessment are both subject to the provisions of this section.”
“The determination of the additional tax payable and the companies covered under this section shall be in accordance with regulations issued by the Service.”
