Experts have said Nigeria’s Value Added Tax increased from N1.19tn in 2019 to N1.53tn in 2020, due to the COVID-19 dynamics and telecommunication.
The experts included the Technical Assistant to ECOWAS Commission for the support programme for tax transmission in West Africa, Andrew Onyeanakwe; Director of Customs Union and Taxation in ECOWAS, Gbenga Falana.
They sought for a review of tax policies in line with ECOWAS best practices.
They stated these in an interview with journalists during the closing ceremony of a three-day workshop on the harmonisation of Nigeria’s VAT Act with ECOWAS directives.
The programme which was organised by the ECOWAS Commission under the context of the implementation of the Support Programme for Tax Transition in West Africa, also evaluated the performance of VAT in Nigeria from 2011 to 2020.
The PATF aimed to improve the management of domestic taxation and ensure better coordination in ECOWAS and West African Economic and Monetary Union regions.
Onyenaekwe said, “During COVID, telcos made so much money because everyone was at home buying data. We consumed so much of our expenses on telecommunication. As they made money, they remitted VAT and after that, we had a rate increase from five per cent to 7.5 per cent.”
According to him, the programme was to expose the stakeholders a study that was carried out regarding the harmonisation of the Nigerian VAT Act in the ECOWAS directives.
He said, “Experts brought out a lot of things that are not in line with our VAT Acts and the ECOWAS directives and one of them was the issue of rates. Nigeria’s rate is at 7.5 per cent and ECOWAS directives state a minimum of 10 per cent.
“Nigeria’s VAT Act does not allow a claim of input tax on capital goods, services and overhead, those are the things we are saying that Nigeria should look into and harmonise the VAT Acts with the ECOWAS directives
“ECOWAS has a VAT guide and the essence is to help practitioners and administrators on how to improve their revenue, not just by increasing rate, but looking at the issues of compliance and ensuring that VAT is really a broad day tax and to make sure everyone is paying.”
Falana said, “Looking at the issue of VAT collection, during the COVID year, we need to understand that VAT is a consumption tax. There are certain things, whether you work or not, it is expected that one would eat and engage in other economic transactions.
“What happened during the COVID year was that there was a lot of spending pattern change from the ordinary person going to the market. We all spent more on telecom, there was a lot of data consumption.”