Experts have attributed the increase in Nigeria's Value Added Tax (VAT) from N1.19 trillion in 2019 to N1.53 trillion in 2020 to the dynamics of the COVID-19 pandemic and the telecommunications sector. The experts, including Andrew Onyeanakwe and Gbenga Falana, emphasized the need for a review of tax policies in line with ECOWAS (Economic Community of West African States) best practices.
During the pandemic, the telecommunications sector experienced significant growth as people relied on data services while staying at home. This led to increased VAT remittances from telecommunications companies, coupled with the rate increase from 5% to 7.5%.
The experts made these remarks during the closing ceremony of a workshop on harmonizing Nigeria's VAT Act with ECOWAS directives. The workshop aimed to improve domestic taxation management and coordination within the ECOWAS and West African Economic and Monetary Union regions.
Onyeanakwe highlighted discrepancies between Nigeria's VAT Act and ECOWAS directives, such as the difference in rates (Nigeria's rate is 7.5% while ECOWAS directives state a minimum of 10%) and the inability to claim input tax on capital goods and services. He advocated for the harmonization of the VAT Act with ECOWAS directives to improve revenue generation and ensure broad compliance.
Falana emphasized that VAT is a consumption tax, and changes in spending patterns during the COVID-19 pandemic, particularly increased spending on telecommunications and data consumption, contributed to the rise in VAT collections.
The experts' recommendations align with the objective of the workshop to enhance VAT administration and compliance, ensuring a fair and effective tax system in Nigeria.
Comments
Post a Comment