Amidst the rise in the cost of living in Nigeria, the government continues to explore new ways to raise money.
Recently, the Minister of Finance Budget and Planning, Zainab Ahmed, in an interview argued that Value Added Tax (VAT) rate should be increased from 7.5 per cent to 10 per cent.
“VAT was one of the ways to increase revenue and we still have to increase VAT because at 7.5 per cent Nigeria has the lowest VAT rate in the world; not in Africa, in the world.”
Value Added Tax is a consumption tax paid when goods are purchased and services rendered. All goods and services (produced within or imported into a country) are taxable except those specifically exempted by the VAT Act.
It is a vital source of revenue for governments across the world. But does Nigeria actually have the lowest VAT rate in the world?
In verifying the claim by the minister, Daily Trust carried out a search on the Global VAT Compliance website. Global VAT Compliance has an up-to-date VAT rate across different countries.
Contrary to the minister’s claim, it was discovered that there are three countries with VAT rates lower than Nigeria, which includes Oman. Thailand and United Arab Emirates (UAE).
Further search on each country’s website also revealed that the numbers are accurate.
On the Thailand website, the VAT implementation had been in place since 1992 replacing Business Tax (BT) and stands at 7 per cent.
Meanwhile, on the Oman website, the VAT rate stands at 5 per cent same as the UAE rate as seen on their website.
Based on the available and verifiable data, Daily Trust can confirm that the claim made by the Finance minister that Nigeria has the lowest VAT rate is false.