Thanks to the introduction of the new 7.5 VAT policy, Nigerians are now spending much more to make calls, browse the internet and access other device-based services. The Value Added Tax is part of the finance bill which was just signed into law.
The VAT was raised from 5 percent to 7.5 percent, after which commercial banks, malls, telcos and government agencies notified their customers regarding its implementation.
The federal government said the increase would consolidate efforts made in the creation of an enabling environment for improved private sector participation. Among other benefits, it also cited intentions to build the country’s economy.
But the situation has garnered increased controversy, as Nigerians have aired concerns regarding the new VAT’s potential ability to cripple businesses and become an additional burden on citizens.
Nigeria, which has one of the highest poverty rates in the world, offers a heckload of obstacles when it comes to doing business. Implementing the 7.5 percent VAT has only made things worse as the drastic change heavily affects consumers.
The Buhari-led administration promised that the new VAT would not affect Nigerians, saying it was one of the measures employed in raising revenue to develop a variety of sectors, including health.
Making attempts to capture more people and businesses into its tax net, the Nigerian leadership targets to get a VAT-derived revenue of NGN 2.08 Tn. The tax regime has caused many business to adjust their charges, which ultimately eats more into the pockets of consumers.
For instance, Electronic Funds Transfer to other banks below NGN 5, 000 charged at NGN 10.50 (NGN 10 plus NGN 0. 50 VAT) will now be charged at NGN 10. 75 (NGN 10 plus NGN 0. 75 VAT).
The media industry is not left out, as outlets operating in the country have reviewed their advert rates upwards while others prepare to follow suit. The implications of the VAT regime would be enormous, regardless of its supposed bigger picture.
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