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FEC approves increase in VAT rate to 7.2%

FEC approves increase in VAT rate to 7.2%
September 11
18:52 2019

The federal executive council (FEC) has approved an increase in value added tax (VAT) rate from 5 percent to 7.2% percent

Zainab Ahmed, minister of finance, budget and national planning, disclosed this to state house correspondents at the end of the cabinet meeting on Wednesday.

However, this is subject to an amendment of the VAT act of 1994 by the national assembly.

If approved by the federal lawmakers, the new rate will take effect in 2020.


VAT replaced the sales tax in 1994 and was pegged at 5% by the military government of Sani Abacha.

In 2007, former president Olusegun Obasanjo increased VAT to 10% on the eve of his departure from office but it was reversed by his successor, Umaru Musa Yar’Adua, following opposition from labour.

Wednesday’s FEC meeting, which started at 11am and ended at 6:12pm, was presided over by President Muhammadu Buhari.


Ahmed said FEC directed immediate consultations with states, local governments and other relevant stakeholders before the new rate takes effect in 2020.

She said: “We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed increase the VAT rate from five percent to  7.2 percent. This is important because the federal government only retains 15 percent of the VAT — 85 percent is actually for the states and local governments and the states need additional revenue to be able to meet the obligations of the minimum wage.

“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT act. So, it is not going to be implemented immediately until the act is reviewed.”

She said the states need the revenue to be able to pay the new minimum wage.


“Following these assumptions, the total revenue estimate is the sum of N7.5 trillion for the year 2020 and N2.09 trillion that will be accruing to the federation account and VAT respectively,” she said.

“There will, of course, be the distribution to the three tiers of government based on the statutorily revenue sharing formula as defined in the constitution and to this effect, it means the federal government will be receiving proposed aggregate of N4.26 trillion from the federal account and the VAT pool, while the states and the local governments are expected to receive N3.04 trillion and N2.27 trillion respectively.”



  1. Baron
    Baron September 11, 22:13

    The VAT rate is still too low considering our debt profile and other weak indicators in our economy. I propose 12 percent with some goods consumed by the poorest of the poor exempt.

    Reply to this comment
  2. Meme
    Meme September 11, 22:27

    I hope cattle breeders and herdsmen would start contributing their taxes , particularly the eminently increased VAT of 7.2%.

    Reply to this comment
  3. Dan
    Dan September 12, 02:18

    Actual trash. When the spending of this government isnt transparent enough, they want to steal even more money from the people to do what??

    Reply to this comment
  4. Honeybell
    Honeybell September 12, 07:11

    I know they wouldn’t read this, because they don’t read; if only they did they would know that this is but an uninformed decision! As far as I am concerned they are only pushing people to the open market, a lot of Nigerians are already struggling to meet their daily food needs, now you want these Nigerians to pay close to 10% of their purchase to some inexistent government, after toiling to make this money with all the government restrictions known to man! We need to find out whose pocket this vat is going into, which of the political leaders! because it’s definitely not for Nigeria. This increase is simply outrageous, and un-calculated! This shouldn’t be allowed to fly! But then again the person whose pocket it would enter would blatantly support it!

    Reply to this comment
  5. ziarzai
    ziarzai September 12, 11:54

    Some With no religious principles turn out to be unsatisfactory when they said some.”Butterfly thinks its self as bird”-oa Rotimi.It is illiteracy that leads a person to thinks himself only to be found in world despite the different people with diverse cultures,countries and continents.let try to be careful and aware that many people are from different calabash!
    Zahraddeen Ibrahim Arzai by name.

    Reply to this comment
  6. Nick
    Nick September 12, 18:14

    Taxing the people to pay the people…hmmm

    Reply to this comment

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