The Federal Government has expressed concern over Nigeria’s poor performance in Value Added Tax (VAT) collection, saying it is the lowest in West Africa and one of the lowest in the world.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this at a public hearing on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) organised by the House of Representatives Committee on Finance on Monday.
She said that Nigeria’s VAT performance was 0.8 per cent of GDP in 2020, compared to 3.8 per cent in Ghana, 5.7 per cent in Senegal and 7.7 per cent in Morocco.
She attributed the low VAT collection to the high level of exemptions and waivers granted to some sectors and items, as well as the weak enforcement mechanism.
She said that the government was working to improve its revenue generation by expanding the tax base, reducing leakages, enhancing compliance and reviewing tax laws and policies.
She also said that the government was committed to implementing the Finance Act 2020, which increased the VAT rate from 5 per cent to 7.5 per cent, as well as the Finance Act 2021, which introduced electronic invoicing and payment system for VAT.
She urged the lawmakers to support the government’s efforts to boost its revenue and reduce its dependence on borrowing to finance its budget deficit.