The Federal Executive Council has approved the increase of the Value Added Tax (VAT) rate in the country from 5 per cent to 7.2 per cent.
Minister of Finance, Budget and National Planning, Zainab Ahmed, told journalists on Wednesday after the FEC meeting in Abuja, that consultations were ongoing on when the new rate would apply.
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She said stakeholders, including the National Assembly and the states, would have to agree on the date expected to be in 2020.
Ahmed said the VAT Act would also have to be amended by the National Assembly before the take-off date of the new rate.
“We also reported to council and council has agreed that we start the process toward the increase of the VAT rate. We are proposing and council has agreed, increase in the VAT rate from 5 per cent to 7.2 per cent,” she said.
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“This is important because the federal government only retains 15 per cent of the VAT; 85 per cent is actually for the states and local governments. The states need additional revenue to be able to meet the obligations of the minimum wage.
“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT Act. So, it is not going to be implemented immediately until the Act is reviewed.”
