Nigeria: How to Raise Revenue as Fast as Fuel Prices Fall

Jan 27, 2015 | Gail Cole

Lagos, Nigeria; city of explosive growth.

Plummeting fuel prices are hitting Nigeria hard: Approximately 80% of the West African country’s revenue comes from fuel exports. Unless there is a sudden surge of worldwide fuel prices, the country may decide to double its rate of value added tax (VAT).

At 5%, Nigeria’s VAT is one of lowest in the world. Raising the rate to 10% would put it on par with Australia and Angola, and with reduced rates in many parts of Europe, where rates easily reach 20% and higher.

Nigerian Finance Minister Dr. Ngozi Okonjo-Iweala told the Wall Street Journal that to cut spending, Nigeria will delay and scrap some of the 6,000 projects currently underway. She is trying to create a realistic budget, which requires “a realistic assumption on where crude prices will stand.” The 2015 budget initially assumed oil would trade at $78 per barrel, but last Tuesday, Brent crude traded at $48 per barrel. The Finance Minister confessed that the bottom is unknown. “Should it be 50? Should it be 45? Should it be 40? Is the bottom 30? I have no idea.”

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photo credit: OpenUpEd via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.

Avalara Author

Gail Cole

Avalara Author Gail Cole

Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.