The World Bank has urged the federal government to increase the Value-Added Tax VAT rate as a measure to boost non-oil revenue into the FG’s coffers.
This advice was contained in the World Bank’s latest Nigeria Development Update (NDU) themed “Turning The Corner, From Reforms and Renewed Hope to Results” launched in Abuja on Wednesday.
In the report, the World Bank reiterated the urgent need to raise non-oil revenues by increasing Value Added Tax (VAT) rate while allowing for input tax credits, improving tax administration, adopting a data-driven approach to tax audit, as well as introduce a simpler turnover tax on Small and Medium scale Enterprises (SMEs) at state level rather than various existing fees and levies.
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In the report, the bank recommended hiking the current VAT rate of 7.5% as a measure towards creating more fiscal space and increasing non-oil revenue.
However, the bank noted that such an increase should allow for input tax credits while exemptions on petrol should be removed as some of the measures recommended to raise non-oil revenues.
“Increase VAT rate while allowing for input tax credit; remove exemptions for petrol products” the report stated.
Other recommendations from the bank geared towards increasing non-oil revenue include; the use of data towards tax auditing and the introduction of simple turnover tax for SMEs at the state level rather than the multiple levies and fees.
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