Finance Minister Edun Announces 15% VAT Increase on Luxury Goods.

The federal government intends to increase the Value Added Tax (VAT) to 15%, with a primary focus on luxury products, according to confirmation from Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy.

Speaking to investors at the ongoing IMF/World Bank Annual Meetings in Washington, DC, Mr Edun clarified that a bill being considered by the National Assembly would gradually raise the value-added tax (VAT) on luxury goods while leaving essential goods that vulnerable Nigerians consume free or at zero.

“In terms of VAT, President Bola Tinubu’s commitment is that while implementing necessary reforms, the poorest and most vulnerable will be protected,” Edun stated.

“The bills going through the National Assembly will raise VAT for the wealthy on luxury goods while exempting or applying a zero rate to essential items used by the poor and average citizens.”

A list of necessities that are VAT-exempt will be made public in due course, Mr. Edun continued.

The minister also cited increased security in oil-producing areas and new investments from firms like Total and ExxonMobil as reasons for optimism over Nigeria’s oil industry.

He pointed out that these changes will increase foreign exchange inflows and oil production.

Speaking on the elimination of fuel subsidies, Edun disclosed that although reforms to the subsidies had been announced earlier, they weren’t fully implemented until last month.

He underlined that in the upcoming months, the economy would be more visibly impacted by the savings from the elimination of subsidies.

In response to questions regarding Nigeria’s financial strategy, Mr. Edun revealed that the government issued domestic dollar bonds in spite of the International Monetary Fund’s (IMF) recommendation that this should not be done.

He confirmed that although Nigeria and the IMF have a cooperative relationship, Nigeria still has financial decision-making authority.