Home Business Economy I was quoted out of context on VAT increase – Taiwo Oyedele

I was quoted out of context on VAT increase – Taiwo Oyedele

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The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele has said that reports he is proposing an increase in Value Added Tax (VAT) rate have been quoted out of context.

At a policy exposure and impact assessment session, organised by the committee on Wednesday, Oyedele had said: “We need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services and accommodation will carry zero per cent VAT. So for the poor and small businesses, no VAT”.
He also said: “We have spoken to businesses about it and they won’t increase the product price. We want to make sure when we do VAT reform, no one will increase the price of commodities. We will work the mathematics with the private sector”.

But in a series of tweets on his official X page later on Wednesday, Oyedele responded to reports that he suggested an increase in VAT.

He said: “This is quoted out of context to suit the objective of the author, What are the issues?

“Nigeria‘s VAT system places a huge burden on businesses as they are not allowed to claim the input VAT incurred on services and assets. Some items, which constitute basic consumptions (food, education, and healthcare) are liable to VAT rather than being exempt or zero-rated”.

“Many small businesses have to contend with VAT compliance in view of the existing low VAT exemption threshold for small businesses. Many states charge other forms of consumption taxes in addition to VAT thereby creating multiplicity of taxes. Export of services and intellectual property bear VAT rather than being zero-rated to promote exports.

“What are we proposing? To address the above identified problems, we are proposing the following:

“Full input VAT credit for businesses to reduce their cost of doing business and minimise the strain on their cash flows, remove VAT on an expanded list of basic food, educational and healthcare items to protect the poor.

“Harmonise all consumption taxes into one (VAT only) and adjust the revenue sharing formula in favour of states to address multiplicity of taxes, remove VAT on export of service and intellectual property to promote non oil exports.

“Increase the threshold for VAT exemption for small businesses, enhance the VAT refund process to reduce the strain on working capital of businesses, introduce VAT fiscalisation and electronic invoicing to curb evasion which makes honest businesses uncompetitive.

“Consequential upward adjustment to the VAT rate on items not exempted to avoid a significant drop in revenue.

“It is important to note that the above proposals do not represent the position of the government but our committee’s reform proposals which we are discussing with the private sector for their input”.

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