It also called for a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance.
Nigerian tax authority is considering an upward review of VAT
The Federal Inland Revenue Service, FIRS, on Tuesday, said there should be an increase in the rate of Value Added Tax (VAT) before the end of 2019.
Tunde Fowler, the Executive Chairman, FIRS, stated this at an interaction with the Nigerian Senate Finance Committee on the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ((PSP).
He said though the collection of VAT has increased over the last three years by over 25% but “in terms of whether there should be an increase. I believe there should be an increase."
Fowler said the agency is working is to increase the number of Nigerians and companies paying VAT through various civic engagement, incentives and road shows.
“One issue about taxation is that it should be fair to all. We have discovered after the VAIDS (Voluntary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting. We’ve also tried to address this issue.
“We have issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted they should contact us."
This is contrary to reports on Wednesday that the FIRS Chairman called a 50% increase in VAT rate.
Nigerian government is currently charging 5% standard VAT rate on products in the country.
Nigeria is looking for ways to increase revenue sources
Nigeria is facing a huge fiscal challenge to meet up with infrastructural development as its population and debt level rise.
To reduce its debt burden, the IMF has also advised it to increase its revenue sources.
In January, Zainab Ahmed, Nigeria's Minister of Finance, said the country is working on modalities to increase VAT on some carbonated drinks and luxury items.
“There will be a VAT increase. During the course of 2019, we will have clarity as to which items and what the rate will be and we will have to take a request to the National Assembly for amendment before it takes effect,” she said during the inauguration of the Strategic Revenue Growth Initiative.
Within the last three years, the government has raised duties on luxury goods and beverages between 10% to 70%.
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