Patrons of luxury goods should brace up to pay more Value Added Tax (VAT), as the Federal government may soon increase VAT from 7.5% to 15%.
This is because the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has confirmed that the federal government plans to raise Value Added Tax (VAT) to 15%, but clarified that the increase would primarily affect luxury goods and services.
In the mobility sector, some of the goods and services that may be affected include First Class Tickets, Private Jets, Luxury automobiles like Rolls Royce, Mercedes Benz among others.
In Nigeria, Rolls Royce and Juguar, seen as luxurious automobiles, are distributed by Coscharis Motors, while Weststar Associates Limited is the authorised exclusive distributor of Mercedes Benz.
Speaking at an investor meeting during the ongoing IMF/World Bank Annual Meetings in Washington DC, Mr. Edun explained that a bill currently before the National Assembly aims to gradually raise VAT on luxury goods, while essential items consumed by poorer and vulnerable Nigerians would remain exempt from VAT or attract a zero rate.
“In terms of VAT, President Bola Tinubu’s commitment is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected,” Edun said.
“So, the Bills going through the National Assembly in terms of VAT will raise VAT for the wealthy on luxury goods, while at the same time exempting or applying a zero rate to essentials that the poor and average citizens purchase.”
He added that the list of essential goods exempted from VAT will be made available to the public in due course.
The Minister also expressed optimism regarding Nigeria’s oil sector, noting that improved security in oil-producing regions and new investments, particularly by Total and ExxonMobil, would result in increased oil production and boost foreign exchange inflows.
