The European Union and Economic Community of West African States want the federal government to increase the Value Added Tax which is currently put at 7.5%.
According to a delegation from the two bodies, the current VAT in Nigeria is below the ideal.
The Head of Cooperation of the Delegation of the EU and ECOWAS to Nigeria, Massimo De Luca, made this remark on Monday at the 4th session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa held in Abuja.
De Luca blamed the low compliance with VAT in Nigeria on corruption and poor implementation.
He noted that while some companies may be willing to pay their taxes, the current taxation system in the country does not allow them to do so.
Earlier, the Chairman of the Federal Inland Revenue Service, Zacch Adedeji, said that the agency would make the taxation system in the country customer-centric so that, individuals and businesses could pay taxes easily.
He also noted that the FIRS would introduce a one-stop shop for all taxes in the country.
VAT is a consumption tax paid when goods are purchased and services rendered. It is a multi-stage tax. VAT is borne by the final consumer. All goods and services are taxable except those specifically exempted by the VAT Act.
De Luca said, “You think VAT works in this country? No, it doesn’t. Fraud makes the business environment unstable for long-term investment. The VAT system is not working because here we have a VAT system that does not allow companies to do what the VAT system is supposed to do- You charge VAT on goods and recover VAT from what you buy.”
