Nigeria restates determination to increase VAT on champagne, yachts, other luxury items

A Yacht [Photo credit:]

The Nigerian government has said that it will increase the Value Added Tax, VAT, on certain luxury items from five percent.

The Minister of Finance, Kemi Adeosun, disclosed this Wednesday after the Federal Executive Council approved the revised National Tax Policy.

The meeting of the council was presided by Acting President Yemi Osinbajo.

According to Mrs. Adeosun, the policy will see the value added tax on luxury items, like champagne and yachts, increasing from its current five per cent, among other policy changes.

In 2014, while unveiling its austerity measures, the government of former President Goodluck Jonathan had listed some items that were to be taxed as luxury goods to include champagne, alcoholic beverages, private jets, luxury cars based on engine capacity, and yachts. The government had projected to generate about N480 billion from taxes on the luxury items.

But in her address on Wednesday, Mrs. Adeosun noted that the implementation of the revised policy would take immediate effect, adding that some aspects that required changes in law would be referred to the National Assembly.

The minister disclosed that Nigeria was one of the countries with the lowest Gross Domestic Product, GDP, tax ratio in the world. She said there is need to review the policy because it was one major factor that contributed to the current economic challenges being faced by the nation.

“With VAT of five percent, we have the lowest VAT. While we don’t think VAT should be increased on basic items, if you are going to drink champagne in the United Kingdom, the VAT is 20 per cent; so, why should it be five per cent in Nigeria?” Mrs Adeosun said.

She added that recommendations have been made to increase the VAT on the luxury goods, adding that the policy will not affect basic goods.

“So, they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately. And I think that is a very valid and sensible suggestion, which we are going to talk to the National Assembly about to see how we can implement it.

“But as far as basic goods are concerned, no. I believe it is only fair that when you consume luxury goods, you should pay a little bit more. The National Assembly will decide the percentage.”

While commenting on the objectives of the revised policy, the minister stated that it is designed to guide the operation and review of the tax system, provide the basis for future tax legislation and
administration, and provide clarity on the roles and responsibilities of stakeholders.

She added that as part of the implementation mechanism put in place, an office of tax simplification would be established and a tax policy implementation committee would also be set up to look.

Other objectives include plans to develop Key Performance Indicators for Nigeria to attain a top 50 on ease of paying taxes by 2020, creation of a dedicated tax policy website, observance of  National Tax Day, as well as the promulgation of an Act to establish the Joint Tax Board’s mandate beyond its current advisory role.

She however added that only one revenue agency per level of government would be allowed, noting that the establishment of administrative framework for amnesty and whistle-blowing would also be facilitated.


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  • VERITAS_ the rock of ages_

    Yey!!! Finally. this is the 10th syphony to my ears. Good idea. This will go a long way to reduce crime, corruption, flamboyant culture in Nigerians. Lets up support this. I hope the luxury tax would be 20% like the UK too.

    • Abdulmojeed Nojeemdeen

      Perhaps! Good.

  • CeeCee1818

    Corrupt people will always find a way to evade paying extra taxes, like trump.

    • VERITAS_ the rock of ages_

      We can use the Italian style. A tax specific police force was created. these cops would stop expensive cars and the owner would have to prove they have paid the luxury tax on that vehicle. From the cars they drive we can workout how to tax them. Then for televisions, AC and home theatres we could use the UK style where no one can buy a tv from the Dealers and carry it themselves home. The dealers always deliver to your home so that home can be charged a TV licence tax. Bright Nigerians need to help out so we can design daily counter measure against fraud by the wealthy. This is a good move by the Nigerian Government. But they should please not tax ICT technology because its a new culture and livelihood.

  • Papajoh

    There should be special tax on anyone using personal police protection/body guard and siren.

  • El Patron

    Long overdue