Following the presentation of the 2020 budget by President Muhammadu Buhari to the joint session of the national assembly, the International Monetary Fund (IMF) on Wednesday, 9th October, 2019 informed that the recent decision by the Nigerian government to raise the Value Added Tax (VAT) by fifty percent (50%) holds positive prospects for the country’s economy.
The IMF in an end-of-mission statement said although the country’s economic outlook under the current administration’s policies remains challenging, the increment of the VAT rate from 5 percent to 7.5 percent is a step in the right direction.
The details of the N10.3 trillion budget tagged “Budget of Sustaining Growth and Job Creation” contained a proposed N8.2 trillion revenue for the year.
During the presentation, President Buhari justified the government’s decision to increase the VAT rate, saying it will provide additional funds for health, education and infrastructure programs.
The President stressed that the decision to raise the threshold for VAT registration to N25 million in turnover per annum was to ensure micro, small and medium-sized businesses were not negatively affected while allowing revenue authorities to focus their compliance efforts on larger businesses.
