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.”
Do you sell globally? Stay on top of changing tax rates around the world. Learn more.
