Value Added Tax VAT in Nigeria Targets Luxury Services, Not Essentials – Expert Explains

Dr. Tijjani Ahmad, a senior lecturer at Hussaini Adamu Polytechnic, has clarified that Nigeria’s Value Added Tax primarily applies to luxury services and non-essential items, not everyday necessities.

In an interview, he explained that basic food, medicines, and educational materials are VAT-exempt to protect low-income and rural households.

He also addressed the misconception about VAT on mobile transfer fees, noting it is not a new tax but is recently enforced. Small businesses with annual revenue below ₦100 million are exempt from VAT registration.

Key Points:

Ordinary Nigerians are shielded from VAT on essential items, though mobile transfer fees now see enforced compliance.
Small businesses below the ₦100 million revenue threshold are exempt, reducing administrative and cost burdens.
VAT revenue sharing now allocates 10% to the federal government, 55% to states, and 35% to local governments.

Public confusion over “new” VAT on transfers reflects a need for clearer communication on tax policies.
The distinction between basic consumption and luxury services aims to make VAT progressive and equitable.

Understanding these exemptions and thresholds may help clarify public perception and improve compliance with VAT regulations.

Sources: Daily Post Nigeria