Wednesday, Mar 3rd 2021 8:08 PM
Lagos
+29°C

Market Digest Nigeria

Economy

Nigeria needs to increase VAT to increase revenue- IMF

borrow

The International Monetary Fund (IMF) in a report on Monday said Nigeria will need to increase its value-added tax (VAT) rate to at least 10% by 2022 and 15% by 2025 from 7.5% to boost revenues after it recovers from a recession.

IMF
“Policy adjustment and reforms are urgently needed to navigate this crisis and change the long-running lackluster course,” IMF said in the report

In February 2020, Nigeria increased its VAT rate from 5% to 7.5%. The increment was widely criticised by many.

International Monetary Fund (IMF) said the increased VAT rate is still among the lowest in the world and less than charged by other major oil-exporting nations.

Despite the increased VAT rate in November 2020, Africa’s largest economy, slipped into its second recession in five years as the gross domestic product contracted for the second consecutive quarter.

The National Bureau of Statistics said the nation’s GDP recorded negative growth of 3.62 per cent in the third quarter of 2020, having recorded a 6.10 per cent contraction in the second quarter.

IMF, however, said a large share of revenues 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, mobilizing revenues through efficiency-enhancing and progressive measures is a top near-term priority,” IMF said.

“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.”

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top
SUBSCRIBE NOW!
Get the best of Market Digest Nigeria financial news
delivered to your inbox daily!
By clicking Give it a try, I hereby: Agree and Consent to the Terms of Use and the Privacy Policy
& I may receive free newsletters & promotions from this site and can choose to unsubscribe anytime.