The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has announced that the federal government will implement a 15 percent Value Added Tax (VAT) on luxury goods. This decision follows the effective removal of fuel subsidies last month.
During a meeting with investors at the ongoing IMF/World Bank Annual Meetings in Washington DC, Edun explained that a bill currently before the National Assembly will ensure that wealthy Nigerians contribute more through VAT. He emphasized that the poorest and most vulnerable populations would benefit from lower or zero VAT on essential goods, the list of which will be made public soon.
Edun stated, “In terms of VAT, the commitment of President Bola Tinubu is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected.” He noted that the proposed VAT changes would target luxury items, allowing for a higher tax rate on those while exempting essential goods to shield the economically disadvantaged.
The minister expressed optimism regarding the oil sector’s potential to bolster the foreign exchange market, attributing this to improved security in oil-producing regions and new investments from companies like Total and ExxonMobil.
In addition, he confirmed that the complete removal of fuel subsidies took effect in September 2024, stating, “Savings from fuel subsidy savings would become more impactful on the economy going forward.”