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Nigeria Seeking Broader Indirect Tax Base

by Lorys Charalambous, Tax-News.com, Cyprus

30 December 2014


When presenting the nation's 2015 Budget recently, Nigerian Finance Minister Ngozi Okonjo-Iweala indicated that the Government is to consider doubling the rate of the nation's value-added tax (VAT) to fund direct tax reforms.

Okonjo-Iweala pointed out that Nigeria levies one of the lowest VAT rates in the world. She said that a doubling of the rate to ten percent could fund a reduction in the nation's relatively high corporate income tax rate of 30 percent to about 20 percent, in a move that would be aimed at supporting small- and medium-sized enterprises.

While hinting that the distribution of VAT revenues might be reviewed alongside a hike, she noted that states would likely be the main beneficiary of such a hike, with 85 percent of VAT revenues currently going to states and the remainder going to the federal Government.

The announcement came alongside the introduction in the Budget of a number of new consumption levies on affluent taxpayers. A new 10 percent surcharge was announced for business jet flights; a 39 percent import surcharge is to be introduced on imported luxury yachts and a 5 percent surcharge on imported luxury cars; and a one percent tax is to be levied on high-value property.

TAGS: Finance | VAT rates | tax | business | value added tax (VAT) | Niger | Nigeria | tax reform

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