The European Union (EU) has criticized Nigeria’s Value Added Tax (VAT) rate of 7.5 per cent as low and inefficient.
Massimo De Luca, Head of Cooperation and Delegation of the EU to Nigeria and ECOWAS, made this declaration at the 4th Session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa (PAFT) in Abuja.
De Luca highlighted the lack of transparency in VAT administration in Nigeria, stating that businesses struggle to recoup the VAT they pay on purchases, making compliance challenging, especially for Small and Medium Enterprises (SMEs).
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He emphasized that the low standard VAT rate hinders revenue generation and called for a robust system to attract investment.
Mr. Andrew Onyenakwe, another speaker at the event, urged for the streamlining of taxes in Nigeria for ease of administration.
The EU also expressed concerns about unpredictable regulations and a lack of transparency in Nigeria, which discourage investors. They highlighted the need to combat tax evasion, including transfer pricing schemes that shift profits overseas to avoid taxation.