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The Federal Government has revealed its intention to increase the number of tax agents in five key sectors as part of an effort to expand coverage and boost Value-Added Tax (VAT) collection. This initiative aligns with Section 14 (3) of the VAT Act and aims to achieve the projected VAT revenue in the upcoming years.
Value-Added Tax (VAT) is a 7.5% consumption tax, collected by the Federal Inland Revenue Service (FIRS) when goods are purchased and services are provided, and it is ultimately paid by the end consumer.
The 2024-2026 Medium-Term Economic Framework outlines that several sectors, including telecommunications, banks, other financial institutions, construction companies, and the aviation industry, will be integrated into the tax network. This expansion goes beyond the current focus on Ministries, Departments, and Agencies (MDAs) and Oil and Gas Companies.
The fiscal policy forecasts an average VAT collection of N35 trillion in 2024, N40 trillion in 2025, and N45 trillion in 2026. These figures factor in adjustments for exemptions, zero-rated items, and the inclusion of companies with turnovers below the N25 million threshold.
The Budget Office of the Federation has disclosed a new law that empowers the Federal Inland Revenue Service to designate agents responsible for withholding, collecting, and remitting VAT. This law will play a crucial role in facilitating tax payments and achieving the non-oil revenue targets outlined in the new policy.
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