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CHART: Data shows Nigeria has the lowest VAT rate in Africa

Available data on Value Added Tax (VAT) for 34 African countries have indicated that Nigeria has the lowest VAT rate as of 2022.

Nigerian-Economy Credit: Nairametrics

Available data on Value Added Tax (VAT) for 34 African countries have indicated that Nigeria has the lowest VAT rate as of 2022.

Value Added Tax (VAT) across the world is a consumption tax levied on products and services by the government of a country. The rate varies from country to country as determined by their VAT legislation. 

Data showing VAT rates across African countries. Credit: Statista

Morocco has the highest VAT rate of 20 per cent. According to the World Bank, the country has a population of 37,112,085 with 142.87 billion US dollars as Gross Domestic Product (GDP) in 2021.

VAT in Morocco is levied under the Moroccan Tax Code and is due on all industrial, commercial, and handicraft transactions taking place in Morocco, as well as on importation operations. The standard rate of VAT is 20 per cent but has some lower rates of 7 per cent, 10 per cent, and 14 per cent which applies to specifically designated operations. Morocco has two types of exemptions from VAT are provided. The first is an exemption with credit, equivalent to the zero tax concept. The second is an exemption without credit.

In Nigeria, VAT is currently 7.5 per cent. It was raised from 5 per cent by the administration of Muhammadu Buhari of the All Progressives Congress (APC) in 2020.  Under the Nigerian VAT Act, government agencies, private and public companies, and companies operating in the oil and gas sector are mandated to deduct VAT at source and remit directly to the Federal Inland Revenue Services (FIRS) monthly.

According to the World Bank, the country’s population is 213,401,323 with a Gross Domestic Product (GDP) of 440.83 billion US dollars in 2021. 

Less than three years after the VAT rate was increased, the country’s finance minister, Zainab Ahmed is already advising the incoming administration to increase the rate to 10 per cent.

According to her, “VAT was one of the ways to increase revenue and we still have to increase VAT because, at 7.5 per cent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world. In Sub-Saharan Africa, the African average is 18 per cent, when you increase your VAT, your Gross Domestic Product (GDP) will grow.” 

Ahmed said the increase would facilitate economic the country’s growth.

The country is expected to go through a transition from one democratically elected government to another on May 29 this year. 

President Buhari would be handing over to Bola Ahmed Tinubu, the president-elect, who was declared winner of the February 25 presidential election by the Independent National Electoral Commission (INEC).

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