National Assembly Proposes Gradual Increase in VAT to 15% by 2030, Reduction in Corporate Income Tax

VAT Set to Rise from 7.5% to 10% in 2025, with Further Hikes Through 2029

The National Assembly is considering a new bill aimed at increasing Nigeria’s Value-Added Tax (VAT) rate from its current 7.5% to 10% by 2025. The executive bill, seen by TheCable on Monday, outlines a further increase in VAT to 12.5% between 2026 and 2029, with a final rise to 15% by 2030.

The bill also proposes a reduction in corporate income tax (CIT), bringing it down from the current 30% to 27.5% by 2025, with a further cut to 25% by 2026. Companies with a turnover below N20 million will remain exempt from paying CIT, as stipulated in the document.

The VAT increment aligns with earlier comments made by Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who, on May 8, 2024, suggested that the VAT rate needed to be raised to bolster government revenue.

Breakdown of Proposed VAT Changes:

• 2025: VAT rate will rise to 10%.
• 2026-2029: VAT rate will increase to 12.5%.
• 2030 and beyond: VAT rate will hit 15%.

The proposed reductions in corporate income tax are aimed at easing the tax burden on businesses:

• 2025: CIT reduced to 27.5%.
• 2026: CIT further reduced to 25%.

The bill also introduces a provision for large companies, particularly those part of multinational enterprise (MNE) groups or with turnovers exceeding N20 billion. These companies will be required to ensure an effective tax rate of at least 15%. If a company’s effective tax rate falls below this threshold, they will need to recompute their taxes and pay the difference.

The bill’s details reflect the government’s ongoing efforts to reform Nigeria’s tax system, balancing higher consumption taxes with a lighter burden on corporate entities to stimulate economic growth.