FG DENIES VAT INCREASE, CONFIRMS 7.5% RATE STANDS

The Federal Government of Nigeria has categorically denied reports of an impending increase in Value Added Tax (VAT), reaffirming its commitment to maintaining the current 7.5% rate. This clarification comes amidst widespread speculation and misinformation regarding potential VAT hikes, which had sparked concerns among businesses, consumers, and stakeholders.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, reiterated the government's stance on VAT, emphasizing that there are no plans to increase the rate. Ahmed stressed that the current 7.5% rate remains in force, dispelling rumors of an imminent hike.

Nigeria's VAT rate was increased from 5% to 7.5% in 2020 as part of the Finance Act 2019, aimed at boosting revenue generation and enhancing fiscal sustainability. The hike took effect on February 1, 2020.

The government's decision to maintain the current VAT rate is underpinned by several factors. Firstly, avoiding sudden changes to VAT rates helps maintain economic stability and predictability for businesses and investors. Secondly, increasing VAT could exacerbate inflationary pressures, undermining efforts to stabilize prices and protect consumer purchasing power.

Moreover, the government aims to optimize revenue collection through improved VAT compliance and administrative efficiency, rather than relying on rate increases. This approach prioritizes fairness, equity, and simplicity in taxation.

The confirmation of the 7.5% VAT rate provides relief to businesses and consumers alike. Stability in VAT rates enables companies to plan and budget effectively, minimizing uncertainty and potential disruptions. Consumers also benefit from sustained affordability of goods and services, shielding them from additional financial burdens.

Economic analysts and industry experts welcome the government's decision, citing benefits such as enhanced business confidence, reduced inflationary pressures, and encouragement of economic growth.

The Federal Government's reaffirmation of the 7.5% VAT rate provides clarity and stability for Nigeria's economic landscape. As the government continues to prioritize revenue optimization and economic growth, stakeholders can rest assured that VAT rates will remain unchanged.

To further bolster economic resilience, experts recommend improving VAT compliance and administration, enhancing transparency in revenue allocation, and fostering public-private sector collaboration.

By maintaining the current VAT rate, Nigeria's government demonstrates its commitment to supporting economic stability, business growth, and consumer welfare.