The Federal Government is moving forward with crucial tax reforms aimed at boosting revenue and fulfilling the requirements for a $750 million loan from the World Bank. This loan is part of a larger $2.25 billion package approved on June 13, 2024, designed to strengthen Nigeria’s economic stability and support vulnerable populations.
Disbursement of the first loan is contingent on meeting specific fiscal and governance conditions outlined in the Accelerating Resource Mobilisation Reforms (ARMOR) program. This program focuses on enhancing VAT collections, improving tax administration, and ensuring greater transparency in oil and gas revenue management.
Key targets under the ARMOR initiative include raising VAT collections to 1.8% of non-oil GDP and registering 660,000 new VAT filers. Additionally, the government is contemplating an increase in the VAT rate from 7.5% to 10% by 2025, with plans to raise it further to 12.5% by 2029.
The proposed reforms also include new excise duties on telecommunications, gaming, and betting activities, as well as an emphasis on enhancing the operational capacity of the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) to ensure compliance and improve revenue collection.
Furthermore, the government has outlined plans for an e-invoicing system to facilitate VAT collections, as well as initiatives aimed at improving audit processes and compliance through better data sharing and risk-based audits.
Overall, these tax reforms are expected to play a pivotal role in enhancing Nigeria’s fiscal landscape, ensuring economic stability, and promoting sustainable development.
