- The FEC meeting that held on Wednesday, September 11, approved the increase in VAT rate to 7.2%
- It should be noted that the approval still needs the nod of the legislators at the National Assembly to take effect
- According to the minister of finance, Zainab Ahmed, revenue generated from the increase will help states pay the new minimum wage
The Federal Executive Council (FEC) has approved the increase in Value Added Tax (VAT) rate to 7.2% from its previous 5%.
The minister of finance, budget and national planning, Zainab Ahmed, made this known to journalist at the state house after the FEC meeting on Wednesday, September 11, The Cable reports.
It should be noted that the new development is still subject to an amendment of the 1994 VAT act by the National Assembly.
That means that it would still need the approval of the Assembly, and if accepted by the lawmakers, the law will take effect by 2020.
“We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed to increase the VAT rate from five percent to 7.2 percent.
“This is important because the federal government only retains 15 percent of the VAT - 85 percent is actually for the states and local governments and the states need additional revenue to be able to meet the obligations of the minimum wage,” she said.
The minister also pointed out the need for the review of the act before the new development is accepted.
“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT act. So, it is not going to be implemented immediately until the act is reviewed,” she said.
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Ahmed also added that the revenue for the increase is needed to enable states across the federation to pay the new minimum wage.
Meanwhile, Legit.ng earlier reported that President Muhammadu Buhari on Wednesday, September 11 presided over the meeting, amidst the tribunal ruling on the February 23 presidential election.
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