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FG To Increase Tax Collection Rate, Targets N9trn In 3yrs -

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News

FG to increase tax collection rate, targets N9trn in 3yrs

FG to increase tax collection rate, targets N9trn in 3yrs

The Nigerian Government is ramping up its tax collection process with a plan to raise about N9 trillion from Value Added Tax (VAT) between 2023 and 2025.

This development comes at the backdrop of an 83.4 percent jump in its VAT collections to N600.15 billion in Q2’22 from N327.2 billion in Q2’20.

Recall that a 50 percent increase in VAT rate from 5 percent to 7.5 percent commenced in February 2020, midway into the first quarter (Q1’20), as part of the tax reforms included in the 2019 Finance Act meant to help the government achieve its revenue projections for the 2020 budget and beyond.

The government’s revenue projection was based on the assumption that the consumption expenditure on which VAT is charged will average N35 trillion in 2023, N40 trillion in 2024 and N45 trillion in 2025.

This means that over the three year period, the government expects N120 trillion as total consumption expenditure of Nigerians. The government expects that at the VAT rate of 7.5 percent, this will translate into total VAT collections of N9 trillion from Nigerian consumers over the period.

The projections were made in the final draft of the 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP) prepared by the Budget Office of the Federation.

The MTEF & FSP document stated: “Consumption expenditure on which VAT is charged is assumed to increase from an average of N35 trillion in 2023, to N40 trillion in 2024 and N45 trillion in 2025 after adjusting for exemptions, zero rated items and companies whose turnover falls below N25 million threshold.”

The federal government base its projections on the expectation that more VAT payers would be brought into the tax net with administrative and operational  improvements.

Jam theconscienceng

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