The Federal Government has decried the abysmal contribution of Value Added Tax (VAT) to the country’s Gross Domestic Product (GDP), saying it is presently less than 1 per cent.
This is even as it stated that Nigeria’s VAT performance was the lowest in the West African region.
The Director of Tax Policy in the Federal Ministry of Finance, Budget and National Planning, Basheer Abdulkadir, stated this at the opening of a three-day workshop on the harmonisation of Nigeria’s VAT Act with ECOWAS directives, organised by the ECOWAS Commission under the context of implementation of support Programme for Tax Transition in West Africa (PATF), which aims to improve management of domestic taxation and ensure better coordination in ECOWAS and West African Economic and Monetary Union regions.
He described the development as worrisome and reiterated the need for a change in policies.
While observing that exemptions of VAT in Nigeria are not aligned with those of ECOWAS, the director called for the exemption of few products, goods and services from VAT, for poor households to benefit from VAT policy, in line with ECOWAS directive.
Abdulkadir said, “Also, we have the lowest VAT within the sub-region with an average of 16 per cent, while VAT rate in Nigeria is 7.5 per cent. So we need a lot of policy changes on tax administration as we also need to come up with strategies to address some of these issues.”
