Newill enrich its economic diversification scheme with a law revising upwards
the VAT rate. The controversial bill is expected to improve tax revenues and decrease the share of
oil rent in the state budget.
In Nigeria, oil exports account for 90% of foreign exchange earnings. Determined to reduce this >< The country announces a law in the making to increase its non-oil revenues. The br project law revealed on 11th September by Finance Minister Zainab Ahmed advocates an increase in the tax on the
value added (VAT) to be applied on goods and services. Nigeria which has one of the VAT rates
the lowest in the world (5%) - against a standard rate of 18% to 20% for the world average - wants
reduce it to 7.2%. Read also: Public revenues: in Africa, VAT remains "queen", but the IR and the IS
According to federal laws, 85% of this amount goes to the states and
local authorities, compared to 15% for the central government. A significant source of income for
States struggling to pay civil servants' salaries increased by the 67% increase in the minimum wage
monthly at about 100 dollars. The draft law already approved by the cabinet of the Ministry of Finance
should go through Parliament for approval. Zainab Ahmed and the President of the Federal Service of
Domestic revenues are expected to defend the plan before Parliament's finance committee. Previously, the
Minister of Finance had given an overview of the country< economic strategy in the coming
years. The proposal also drew the ire of the main opposition party, the People's Democratic Party
(PDP) which believes that this provision will cause additional pressure on household companies with an increase in the costs of goods and services. Re-elected for a second 4 February 2019, Nigerian President Muhamadou Buhari – in power since 2015 – made diversification of
the economy is one of its priorities. At the end of 2014, a sharp fall in hydrocarbon prices plunged the country into recession (2016 and 2017). The crisis has reduced the country's outlook, whose growth slowed to -2% in the first half of 2019. Read also: Nigeria: Total pays N4.75 billion in dividends to its shareholders The VAT law is part of a vast economic diversification program to reduce the share of the country's oil and gas exports.
Having put in place a recovery plan for the agricultural sector deemed protectionist, Nigeria has undertaken measures to improve the level of tax collection, combat the informal sector and have increased taxes on many products.