Federal Government to Implement 15% VAT on Luxury Items
Written by Agboola Oluwafemi on October 25, 2024
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has disclosed that the federal government will soon impose a 15% Value Added Tax (VAT) on luxury goods as part of broader efforts to bolster state revenue. Coupled with last month’s full removal of fuel subsidies, this initiative is intended to strengthen fiscal resources while shielding lower-income Nigerians from undue tax burdens.
Speaking to investors at the IMF/World Bank Annual Meetings in Washington, DC, Edun explained that a pending bill before the National Assembly outlines a phased VAT increase on luxury items, mandating wealthier Nigerians to bear a higher share of tax contributions. The initiative also ensures minimal to zero VAT on essential goods for the poor and vulnerable, with a comprehensive list of exempt items set to be made public.
“In terms of VAT, the commitment of President Bola Tinubu is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected,” he stated. “Those bills will single items for zero rate of VAT while hitting luxuries with a higher rate of VAT.”
Edun expressed optimism regarding the projected rise in foreign exchange inflows from the oil sector, supported by enhanced security in production areas and significant new investments from companies such as Total and ExxonMobil. He also noted that the complete elimination of fuel subsidies, fully effective since September 2024, is expected to deliver significant economic gains, with fiscal savings contributing further to the nation’s economic fortification.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has disclosed that the federal government will soon impose a 15% Value Added Tax (VAT) on luxury goods as part of broader efforts to bolster state revenue. Coupled with last month’s full removal of fuel subsidies, this initiative is intended to strengthen fiscal resources while shielding lower-income Nigerians from undue tax burdens.
Speaking to investors at the IMF/World Bank Annual Meetings in Washington, DC, Edun explained that a pending bill before the National Assembly outlines a phased VAT increase on luxury items, mandating wealthier Nigerians to bear a higher share of tax contributions. The initiative also ensures minimal to zero VAT on essential goods for the poor and vulnerable, with a comprehensive list of exempt items set to be made public.
“In terms of VAT, the commitment of President Bola Tinubu is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected,” he stated. “Those bills will single items for zero rate of VAT while hitting luxuries with a higher rate of VAT.”
Edun expressed optimism regarding the projected rise in foreign exchange inflows from the oil sector, supported by enhanced security in production areas and significant new investments from companies such as Total and ExxonMobil. He also noted that the complete elimination of fuel subsidies, fully effective since September 2024, is expected to deliver significant economic gains, with fiscal savings contributing further to the nation’s economic fortification.
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Author: Agboola Oluwafemi
Marketing Expert
