Vice President Yemi Osinbajo on Monday said the Value Added Tax (VAT) regime is not meant to create extra burden for Micro, Small and Medium Enterprises (MSMEs). He insisted that it is the lowest in Africa.
Osinbajo spoke in Lafia, Nasarawa State, at the National Micro, Small and Medium Enterprises Clinics for Viable Enterprises.
He said: “Many people have said this is a higher tax rate for consumers and has complications on those who are trading as well. You must remember that this is the lowest VAT rate in the whole of Africa. While it is true is that Ghana has reduced its VAT rate from 15 to 12.5 percent. Ours is 7.5 per cent.”
Osinbajo said small and medium scale companies with a turnover of less than N25 million do not have to register for VAT. With this, he noted that government is not creating any extra burden for the small and medium companies.
Besides, to further ameliorate the impact of VAT on consumers, several basic items such as food, drugs and educational items have been exempted from VAT.
He however said the hike in VAT would lead to additional revenues accruing to the states.
“This means additional revenues will now go to the states from VAT. The states can now be able to earn additional revenues so that they can do additional things, at least to begin to pay the new minimum wage. This way, it will improve consumers spending as well,” Osinbajo said.