Osinbajo: Nigeria’s VAT Rate Lowest in Africa

Igbawase Ukumba in Lafia

Vice President Yemi Osinbajo yesterday said that Nigeria’s Value Added Tax (VAT) is the lowest in the whole of Africa.

The vice president stated this in Lafia, the Nasarawa State capital, at the National Micro, Small and Medium Enterprises Clinics for Viable Enterprises.

According to Osinbajo, “many people have said this is a higher tax rate for consumers and has complications on those who are trading as well. You must remember that this is the lowest VAT rate in the whole of Africa.”

“While it is true that Ghana has reduced its VAT rate from 15 to 12.5 per cent, ours is 7.5 per cent,” he added.

He noted that small and medium companies with a turnover of less than N25 million do not have to register for VAT.

“So, that way, the government is not creating any extra burden for the small and medium companies. In addition to reducing the impact of VAT on consumers, several basic items such as food, drugs and educational items are exempted. So, there is no payment of VAT on food, drugs and educational items,” Osinbajo said.

The vice president disclosed that the additional revenues from VAT would now go to the states for the payment of the new minimum wage.

He said: “There is another upside increase in the VAT. This additional revenue will now go to the states from VAT. The states can now be able to earn additional revenues so that they can do additional things – at least to begin to pay the new minimum wage. This way, it will improve consumers spending as well.”

“I think despite the increase in VAT, there are so many in-built advantages for the small businesses to thrive. On our part at the federal level, we are hoping on the establishment of shared facilities across the country.”

Osinbajo expressed optimism on the economic transformation programme of Governor Abdullahi Sule’s led administration, and charged the small businesses in the state to take advantage of the opportunity offered by the Nasarawa State government.

In a remark, Governor Sule said that the state has keyed into the federal government’s initiative of Economic Recovery and Growth Plan (ERGP).

He said: “It is for this reason that, we developed the Nasarawa Economic Development Strategy (NEDS) and continued to initiate policies and programmes, geared towards the creation of conducive business environment for business to strive, poverty reduction, as well as job creation in the state.”

“In this regard, we constituted the Nasarawa State Enabling Business Environment Council (NEBEC)in line with the federal government’s framework to drive reforms on ease of doing business.”

The governor stated that the state government has commenced the conceptualisation of an industrial cluster within the Abuja-Nasarawa corridors for small industries to thrive and serve as a major hub for small industries with seamless start-up businesses.