It has been recommended that the National Assembly should omit the Value Added Tax rate from the suggested tax legislation to facilitate simpler modifications in subsequent periods.
The Nigerian tax bill, named 'An Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions and Instruments, and for Related Matters,' was among four bills submitted to the National Assembly by President Bola Tinubu on October 3, 2024.
The legislation suggests incrementally raising the VAT rate from its present level of 7.5% up to 10% in 2025, then increasing it further to 12.5% during the period from 2026 through 2029, with an ultimate target of reaching 15% starting in 2030.
On Tuesday, the House of Representatives approved all four tax bills for their third reading, whereas the Senate continues to discuss these proposals.
Speaking with Saturday PUNCH The Chairman of the Forum for State Commissioners of Finance, Akin Oyebode, noted that although tax law reforms were badly needed, VAT should not be included within the legislative framework.
He stated, "The tax legislation in Nigeria hasn't been significantly altered for more than half a century. Individuals concerned with the nation's welfare would appreciate these changes. It is not feasible to keep functioning under such outdated regulations."
“However, VAT rates and allocation formulas shouldn’t be established within the law itself. Incorporating VAT into legislation implies that each modification would necessitate a legal reassessment, which isn’t optimal. Instead, the statute ought to outline general guidelines; specific aspects such as the distribution of VAT should be managed via a financial bill subject to periodic examination."
In similar fashion, Paul Alaje, who serves as the Chief Economist at SPM Professionals, voiced his worries regarding the proposed increase in the VAT rate.
"I grasp their logic; they aim to streamline the amendment process. Although I back the tax bill, the VAT rate should stay constant. An uptick, even just half a percent, would exacerbate inflation, which I am prepared to illustrate for anyone," Alaje stated.
He raised doubts about the possibility of standardizing tax rates, cautioning that it might lead to economic complexities.
Provided by SyndiGate Media Inc. Syndigate.info ).
0 Comments