The Chairman, Federal Inland Revenue Service (FIRS), Babatunde Fowler, on Wednesday denied reports of a plan to increase the rate of value added tax (VAT) by 50 percent to enable government pays the new national minimum wage of N30,000 passed by federal lawmakers.
The Minister of Budget and National Planning, Udo Udoma and FIRS Chairman, Babatunde Fowler, who appeared before Senate Committee on Finance at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ((PSP) interactive meeting on Tuesday, both said the Federal Government had to increase VAT rate to raise funds to pay the new national minimum wage of N30,000.
“By the end of this year, we should be ready for an increase in VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher, and they pay when they go for those trips. We should be ready for an increase in VAT.
“I can certainly see an increase in VAT of at least 35 percent to 50 percent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax (CIT) and also on Petroleum Profit Tax (PPT),” Fowler had said at the meeting.
But the Head, Communication and Servicom Department, Wahab Gbadamosi, in a statement in Abuja on Wednesday said that at the meeting, Fowler only called for an increase in the number of Nigerians and companies paying VAT, and an increase in the VAT rate “by the end of the year”.
He said the FIRS Chairman also called for a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance.
“Though he indicated that there should be an increase in VAT rate by the end of the year, he never for once suggested a 50 percent hike of any percentage increase at all.
“Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018,” he said.