The Federal Government on Wednesday said it may increase the Value Added Tax (VAT) from its current 5% and also introduce new excise duties to boost non-oil revenue to finance development projects in the country.
The Minister of Finance, Zainab Ahmed, who spoke at the unveiling of government’s Strategic Revenue Growth Initiatives in Abuja, said the initiative was “to harmonise efforts of all the revenue generating agencies towards boosting accruals into government’s coffers and to sustain revenue generation in all sectors and maintain fiscal buoyancy and resilience.”
She, however, did not disclose the new VAT rate being proposed by the government.
She said, “We are studying a possibility of a VAT increase but you also know that the increase of VAT requires an amendment of a law. It is most likely the VAT increase will be selective. It will be on special items so it won’t be across the board.
“There would be a VAT increase during the course of 2019, we will announce later the items and what the rate would be. We would have to take a request to the National Assembly for amendment before it takes effect.
“President Muhammadu Buhari has mandated the Federal Ministry of Finance to generate more revenues to finance national development and to proactively monitor collections by all Ministries Departments and Agencies (MDAs) involved in revenue generation.”
The minister said government “will also be looking at new revenue streams and enhanced enforcement with regard to revenue collection from our existing revenue streams. Through the initiative, we hope to achieve cohesion between revenue generating entities and equipping them with cutting-edge tools and expertise needed to support high performance.”
Other major revenue generating agencies also made presentations on the initiatives they would introduce in their respective agencies to increase revenue.
The Comptroller-General of Customs, Hameed Ali, who also spoke at the event, said Nigeria Customs Service (NCS) will focus on reducing smuggling, block mis-invoicing and illicit flow of goods as well as acquire non-intrusive scanners to be deployed to all ports.
He also disclosed that the NCS will introduce new excise duties, lamenting that “at the moment, the country only collects excise duty on alcohol and cigarettes”.
Ali said the NCS would also look into including carbonated drinks since they also have health implications for consumers.
He advocated a review of the country’s policy on exports to to allow Customs charge duties on exports.
In his presentation, the Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, said the service plans to kick-start the drive to boost revenue by reviewing the current legal framework on tax.
Fowler said the FIRS will go ahead to collaborate with Deposit Money Banks (DMBs) “to get names of companies and individuals with funds in excess of N1 billion and make sure that appropriate tax is collected.”
The FIRS, he said would also ensure that it collects tax on properties owned by corporate entities in the country. This tax on property, he said, is not property tax but tax on corporate gains.
He added that FIRS would also link up with the Nigeria Customs Service (NCS) to get data on companies that import goods into the country, to ensure that they pay their fair share of tax.
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