The Federal Executive Council on Wednesday approved an increase in the Value Added Tax (VAT) payable in Nigeria from the current 5 per cent to 7.2 per cent.
Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning who announced the approval while briefing newsmen after the FEC meeting presided by President Muhammadu Buhari said the implementation will not be immediate as there was the need to amend the current law.
“We also reported to council and council has agreed that we start the process towards the increase of the VAT rate.
“We are proposing and council has agreed to increase the VAT rate from 5 per cent to 7.2 per cent,” she said.
According to Premium Times, Mrs Ahmed also gave an increase in revenue accruable to state governments as one of the reasons for the increase.
“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 government and the states need additional revenue to be able to meet the obligations of the minimum wage.
“This process involves extensive consultations that needs 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,” she said.