Caption: Wale Edun,Finance Minister
Nigeria’s federal government plans to impose a 15% Value Added Tax (VAT) on luxury goods, according to Finance Minister and Coordinating Minister of the Economy, Wale Edun.
The move, which is part of broader economic reforms, aims to ensure wealthier citizens bear a higher tax burden, while essential goods remain exempt for the country’s poorer and vulnerable populations.
Speaking on the sidelines of the ongoing International Monetary Fund (IMF) and World Bank Annual Meetings in Washington D.C., Edun explained that the VAT bill currently before Nigeria’s National Assembly proposes a phased increase in VAT for luxury goods.
“The commitment of President Bola Tinubu is that while implementing difficult but necessary reforms, the poorest and most vulnerable will be protected,” Edun emphasized.
Under the proposed tax framework, VAT on luxury items is set to rise to 15%, while essential goods would attract reduced or zero VAT.
A detailed list of essential goods that will be VAT-exempt is expected to be released soon, ensuring that everyday commodities remain affordable for low-income households.
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Edun also confirmed that the complete removal of Nigeria’s longstanding fuel subsidy became effective in September 2024.
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The finance minister projected that savings from subsidy cuts would boost the economy in the months ahead, as oil production ramps up amid improved security in key oil-producing regions.
Recent investments from global energy giants Total and ExxonMobil are expected to further bolster foreign exchange inflows.
“The savings from fuel subsidy removal will have a more significant impact on the economy going forward,” Edun noted, underscoring the administration’s intent to channel those funds toward economic growth and social support programs.
