Claim: Nigeria Has the Lowest Value-Added Tax (VAT) Rate
Verdict: False
Context: As Nigeria struggles with a rising cost of governance and depleting revenue, the government continues to look for avenues to raise money. One such way is through Value Added Tax (VAT). Recently, the country’s Minister of Finance Budget and Planning, Hajia Zainab Ahmed, while paying a courtesy call on Nigeria’s international broadcasting station, Voice of Nigeria, argued that Nigeria should raise more revenue from VAT, by increasing the rate from 7.5% to 10%. To justify her stance, the minister stated that “VAT was one of the ways to increase revenue, and we still have to increase Value Added Tax (VAT) because, at 7.5 percent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world.”
Value-Added Tax (VAT) was introduced in 1993 to replace the sales tax in Nigeria. It continues to take up more space in its contribution to Nigeria’s revenue, reaching a whopping N1.2 trillion Naira in the first six months of 2022. The Minister stressed that Value Added Tax (VAT) is a consumption tax paid when goods are purchased, and services rendered. All goods and services (produced within or imported into a country) are taxable except those specifically exempted by the VAT Act. It is a vital source of revenue for governments across the world. But does Nigeria actually have the lowest VAT rate in the world?
Verification: In verifying the claim by the Minister of Finance Budget and Planning, Hajia Zainab Ahmed, CDD fact checkers carried out a search on the Global VAT Compliance website. Global VAT Compliance has an up-to-date VAT rate across different countries. Contrary to the minister’s claim, it was discovered that there are three countries with VAT rates lower than Nigeria, which include Oman, Thailand, and United Arab Emirates (UAE). Further search on each country’s website also revealed that the numbers are accurate. On the Thailand website, the VAT implementation had been in place since 1992 replacing Business Tax (BT) and stands at 7 percent. Meanwhile, on the Oman website, the VAT rate stands at 5 percent same as the UAE rate as seen on their website.
Conclusion: Based on the available and verifiable data, findings by CDD fact-checkers show that Oman has 5% VAT rate, Thailand 7% VAT rate, and the UAE has 5% VAT rate lower than Nigeria’s 7.5% charge. Therefore, CDD fact-checkers can confirm that the claim made by the Finance Budget and Planning, Hajia Zainab Ahmed that Nigeria has the lowest Value Added-Tax (VAT) rate is false.
