ECOWAS presents reviewed VAT harmonisation document to Nigeria

The Economic Community of West African States (ECOWAS) has presented a reviewed document of Value Added Tax (VAT) harmonisation to stakeholders in the Nigerian economic sectors for the country to review it with the current economic reality.

This presentation was done at a three-day Workshop on Nigeria’s Value Added Tax (VAT) Law held in Abuja.

The Tax Expert Advisor to the Director of Custom Union and Taxation at the ECOWAS, Falana Oyebode, said they are actually looking at fiscal transition in the sub-region and harmonization of fiscal transition in the sub-region.

Oyebode said there has been a document that speaks to the ECOWAS directive on VAT, but in line with the realities of the time in the sub-region, the document has actually been reviewed and they have made presentations to critical stakeholders in the member states which Nigeria is part of.

“We are presenting the document so that they can see what has evolved from the document they used to have at the inception of that particular document, and look at it with the current situation of things in the fiscal space in Nigeria and begin to see if there is any input into the document that needs to reflect the Nigerian reality.

“When we look at the issue of fiscal harmonization, there are two approaches, we look at it from the equalization approach or you want to look at the differential approach, but again, what is plausible that majority of the countries would be looking at is the differential approach.

“The reason for the differential approach is that we want to look at what is the contextual reality in your home front so that you don’t submit totally to a single regime which is equalization,” he added.

Andrew Onyenakwe, who works with ECOWAS Support programme for Tax Transition in West Africa said one of the things ECOWAS has done and is in line with the ECOWAS protocol of which Nigeria is a signatory is that every Member State should align with the ECOWAS directive and the directive has provided that VAT should be at a particular level.

He noted that Nigeria, for now, is still the lowest in the sub-region, and ECOWAS has provided in their directives that there should be a minimum rate of 10% and we are still at 7.5 per cent.

“So the implication is that first that we have to increase our rate if we must comply with the directive, and to increase rate, there are so many things that will come with it, like will Nigerians accept the increase of rate at this moment when half of the country is living below the survival threshold.

“But it will help Nigeria in bringing in more revenue, but accountability and transparency of what revenue is used for will also come in because the social contract between the citizens and the government is that citizens have an obligation to pay tax and the government also has its own obligation to ensure that infrastructure and everything is taken care of regarding the citizens,” Onyenakwe stated.

CG Ogbonna, Custom Officer in Charge of Tariff in his submission, said “Custom is an implementing Agency, anything the government asks us to do concerning fiscal policy, that is what we are going to do”.

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