Nigeria’s V.A.T. Too Low – European Union Declares

The European Union has declared Nigeria’s Value Added Tax, VAT, rate of 7.5 per cent as low and inefficient.

Massimo De Luca, Head of Cooperation and Delegation of the EU to Nigeria and ECOWAS, gave the verdict at the 4th Session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa (PAFT) in Abuja, yesterday.

According to the EU official, VAT administration in the country also lacks transparency.

“Businesses cannot be sure of recouping the VAT they pay on purchases, making compliance difficult, especially for Small and Medium Enterprises (SMEs).

“Secondly, the standard VAT rate of 7.5 per cent is too low, hindering revenue generation,” he said.

De Luca emphasized the importance of a robust system for attracting investment, according to him, “Unpredictable regulations and a lack of transparency discourage investors.”

The EU chief acknowledged companies’ frustrations with sudden policy changes, citing the recent $15,000 expatriate levy.

He highlighted the need to combat tax evasion, including transfer pricing schemes that shift profits overseas to avoid taxation. The EU, he said, penalizes companies that exploit weak tax systems elsewhere.

In his remarks, Mr. Andrew Onyenakwe, another speaker urged taxes in the country be streamlined for ease of administration.