The Federal Government has unveiled ambitious plans to bolster Value-Added Tax (VAT) collection by hiring more tax agents in five key sectors.
This initiative aligned with Section 14(3) of the VAT Act and was designed to optimize VAT revenue and work towards achieving projected earnings in the coming years.
VAT, a 7.5 percent consumption tax, is managed by the Federal Inland Revenue Service and is imposed on goods and services, ultimately shouldered by the end consumer.
The sectors to be newly included in the tax net as per the 2024-2026 Medium Term Economic Framework encompass telecommunications, banks, other financial institutions, construction companies, and the aviation industry.
This expansion extends beyond the current scope, which primarily covers Ministries, Departments, Agencies, and Oil and Gas Companies.
The fiscal policy projects a substantial increase in VAT collection, from an average of N35 trillion in 2024 to N40 trillion in 2025 and N45 trillion in 2026.
The adjustments will involve revisiting exemptions, zero-rated items, and the inclusion of companies with turnovers falling below the N25 million threshold.
A pivotal aspect of this strategy, according to documents obtained from the Budget Office of the Federation, is the enactment of new legislation that empowers the Federal Inland Revenue Service to appoint agents to withhold, collect, and remit VAT.
This move aims to facilitate seamless tax payments and contribute to the realization of non-oil revenue targets.
It underscores the government’s commitment to enhancing tax collection and creating a more robust fiscal system.
