Gov’t Increases VAT To 7.2% Same Day Tribunal Okays 2019 Election Victory – And Nigerians Are Pissed!

By  |  September 12, 2019

Nigeria’s VAT is going to be reviewed upwards.

When Zainab Ahmed, Nigeria’s Minister for Finance, Budget & National Planning, addressed the weekly Federal Executive Council (FEC) meeting yesterday, she did drop something of a shocking announcement.

Per the words of the minister, it can be deduced that the Nigerian government wants to get its hands on more funds and everyone’s going to have to pay for it.

During the FEC session, the Finance Minister made it known that the Nigerian government has approved a 2.2 percent increase in Value Added Tax (VAT).

Zainab Ahmed

This means that, pending formal approval by the National Assembly, the new VAT rate will now be 7.2 percent, up from 5 percent. She said the increase was intended to expand fiscal revenue in the country — funds that will go into the state and local governments.

Cross-Border Money Transfer In Africa: Is Bitcoin The Golden Silver Bullet?


“This is important because the federal government only retains 15 percent of the VAT, 85 percent is actually for the states and local government and the state need additional revenue to be able to meet the obligations of the minimum wage,” the Minister said.

“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 added.

What A VAT Increase Would Mean For The Average Nigerian

Simply put, a VAT increase would lead to an increase in the price of products and services. Essentially, it could cause full-blown inflation.

In Nigeria, Value Added Tax (VAT) is payable on all kinds of goods and services consumed by any person, whether government agencies, business organisation or individuals. 

By law, only medical and pharmaceutical raw materials and products, basic food items, baby products, commercial vehicles and spare parts, fertiliser, diplomatic goods, and a few other products are excluded from the VAT net.

Usually, businesses include VAT in the final cost of products and/or services they render. This means it is the customer or end-user that gets to pay for it. And increased VAT would imply higher bills for customers to pay since it’s hard to envisage a decrease in production costs.

Essentially, here’s what the new VAT regime might bring about:

  • Increase in inflation rate as the price of goods and services not exempted from VAT is bound to increase.
  • Increased government revenue for various infrastructural and economic projects.
  • Hardship for workers whose purchasing power would be hurt by the hike in costs if their paychecks remain the same.
  • Market operations in the informal sector may take a significant hit as price hikes would discourage consumption. Business activities may ultimately slow down.

How Are Nigerians Reacting To The Newly Proposed VAT Regime?

The proposed VAT hike has caused an outcry on social media, especially Twitter where many agitated Nigerians are questioning the decision of the government.

See some of the reactions below:

Featured Image Courtesy:

Journalism is broken in Africa

Help us build a narrative on African Business, Startups, Tech and Economy
Join us today to empower great story telling, one story at a time

Monthly Membership


(billed monthly)

Access To 1 Month WT Membership

Access To Premium Newsletters For 1 Month

1 Month Access To WT's Content Archive

Access To WT's Conferences & Events

Access To All WT's Research Reports On Africa

Access To Podcasts, Video Content & Recordings

Subscribe Now

Annual Membership


(billed annually)

Access To 12-Month WT Membership

Access To WT's Conferences & Events

Access To All WT's Research Reports On Africa

Access To Podcasts, Video Content & Recordings

Access To All Premium Newsletters

Unlimited Access To WT's Content Archive

Subscribe Now

If you are a Corporate or a Student, please reach out to us for subscription at [email protected]