FG to Introduce 15% VAT on Luxury Goods, Plans Relief for Essential Items

The Nigerian federal government has announced plans to implement a 15 percent Value Added Tax (VAT) on luxury goods, as part of a new economic reform aimed at targeting wealthier citizens while protecting lower-income households. This was confirmed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, during the IMF/World Bank Annual Meetings in Washington, DC.

Mr. Edun addressed investors, explaining that the proposal currently before the National Assembly will establish a progressive VAT structure. This means higher VAT rates on luxury items, eventually reaching 15 percent, while essential goods—those relied upon by the poor and vulnerable—would be subject to reduced or zero VAT rates.

“President Bola Tinubu’s commitment is to cushion the impact of these economic reforms on the poorest and most vulnerable Nigerians,” Edun stated. “While VAT is an efficient tax, we aim to make it a targeted one. The legislation in progress seeks to impose a higher VAT on luxury goods while exempting essential items for average consumers.”

The government has not yet released the full list of goods to be classified as “essential” and eligible for VAT exemption, though Edun assured that this information would be made public soon.

In addition to VAT reform, Edun also highlighted progress in Nigeria’s oil sector, noting that increased security in oil-producing areas and significant investments from energy giants like Total and ExxonMobil are expected to boost oil production. He indicated that this growth could help stabilize the nation’s foreign exchange reserves.

Edun further confirmed that Nigeria’s complete fuel subsidy removal took effect last month. “With the full removal of the fuel subsidy now in place, we anticipate greater economic impact from the savings generated,” he said.