FG plans to raise VAT to 15% on luxury goods, Minister of finance Edun

The Minister of Finance, Wale Edun, has confirmed that Nigeria's federal government is moving forward with plans to raise the Value Added Tax (VAT) to 15%, targeting luxury goods as part of its economic reforms.

This announcement came during an investor briefing at the on-going IMF/World Bank Annual Meetings in Washington DC.

The proposal, currently under review by the National Assembly, seeks to gradually increase VAT on high-end items while ensuring that essential goods consumed by the average and vulnerable Nigerian citizens remain exempt or attract a zero tax rate.

"President Bola Tinubu's administration is committed to safeguarding the welfare of the poorest Nigerians," said Edun. "Our reforms will target luxury consumption, sparing essential goods from VAT hikes."

Edun further assured that the government would soon release a list of goods exempt from VAT to provide clarity to the public.

Aside from tax reforms, Edun discussed Nigeria's oil sector, highlighting improved security in the Niger Delta, which has attracted fresh investments from companies like Total and ExxonMobil.

He noted that these developments would likely increase oil production, enhancing foreign exchange inflows, which are crucial to stabilising Nigeria’s economy.

The minister also addressed the recent removal of fuel subsidies, explaining that the full impact of this reform would become more apparent in the coming months.

While the initial announcement was made earlier in the year, full implementation only began last month, and the savings generated are expected to have a significant positive impact on the economy.

In a bold move, Nigeria issued domestic dollar bonds despite the International Monetary Fund's advice against it. Edun emphasised that while Nigeria values its relationship with the IMF, the country retains its sovereignty in making key financial decisions.

He reaffirmed the government's commitment to pursuing economic strategies that align with Nigeria's long-term growth and stability.