The National Assembly is currently reviewing a bill that aims to raise the Value-Added Tax (VAT) from 7.5% to 10%.
This increase is planned to take effect by 2025, following a statement made by Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms Taiwo Oyedele on May 8, 2024, emphasizing the need for a VAT adjustment.
In addition to the VAT increase, the bill proposes a reduction in the Corporate Income Tax (CIT) from 30% to 27.5% by 2025, with a further decrease to 25% by 2026. Notably, companies with an annual turnover of less than N20 million would be exempt from paying CIT under this legislation.
Additionally, the bill stipulates that if a company’s effective tax rate falls below 15% in any assessment year, it must recompute and pay an additional tax to bring its effective rate up to 15%. This requirement applies to multinational entities (MNEs) and other companies with an aggregate turnover of N20 billion or more.
The proposed changes aim to balance the tax burden while encouraging business growth and compliance among larger corporations.
