The Federal Government has commenced a comprehensive review of Value Added Tax (VAT) exemptions and zero-rated supplies under Nigeria’s new tax regime with the inauguration of an Inter-Ministerial Committee to develop the 2026 VAT Modification Order.
The initiative is aimed at ensuring the smooth implementation of the Tax Reform Acts, which came into effect on January 1, 2026, while providing greater certainty for businesses, investors and tax administrators.
The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, inaugurated the committee on Friday, charging members to deliver a practical and modern VAT framework that reflects the objectives of the new tax laws and responds to the realities of Nigeria’s evolving economy.
Oyedele described the Tax Reform Acts as the most significant overhaul of Nigeria’s tax system in decades, noting that the reforms were designed to simplify tax administration, improve compliance, strengthen competitiveness, protect vulnerable Nigerians and support sustainable economic growth.
According to him, while the previous VAT Modification Order served its purpose under the repealed VAT Act, the new legal framework requires a fresh order to provide clarity, update relevant schedules and support the implementation of the Nigeria Tax Act.
“This is not about reproducing an old document. It is about developing a VAT Modification Order that is clear, practical and responsive to the needs of a changing economy,” the minister said.
He explained that the new order should eliminate uncertainty, make tax compliance easier for businesses, support investment decisions and provide tax administrators with clearer guidance in implementing the law.
As part of its mandate, the committee is expected to conduct a detailed review of the legal framework, administrative practices and policy directives governing VAT administration, particularly the VAT-exempt and zero-rated provisions contained in Part IV of the Nigeria Tax Act, 2025.
The committee will also identify areas requiring further clarification and engage widely with stakeholders across government, the organised private sector, professional bodies and other interest groups to ensure that the final recommendations are practical and balanced.
Oyedele further directed the committee to recommend a comprehensive schedule of VAT-exempt and zero-rated goods and services, taking into account revenue implications, social impact, Nigeria’s treaty obligations and regional integration commitments.
In addition, members are expected to prepare an implementable VAT Modification Order that aligns with the provisions of the Nigeria Tax Act and recommend amendments to the Tax Reform Acts and other enabling laws where necessary to strengthen implementation.
The minister urged the committee to ensure that its recommendations remain faithful to both the letter and spirit of the new tax laws, adding that the order should promote industrial growth, encourage investment, support exports, strengthen food security, drive innovation and facilitate Nigeria’s energy transition without undermining the integrity of the VAT system.
He stressed the importance of reducing ambiguity in VAT administration to enable taxpayers, investors, regulators and tax administrators to operate with greater confidence and certainty.
Oyedele also encouraged members to draw lessons from international best practices while ensuring that the final document reflects Nigeria’s unique economic realities and development priorities.
The committee has been given six weeks to complete its assignment and submit a draft VAT Modification Order, schedules of VAT-exempt and zero-rated supplies with their corresponding Harmonised System Codes, implementation notes, a stakeholder consultation report and recommendations on any legislative amendments considered necessary.
Its membership comprises representatives of the Federal Ministry of Finance, the Nigeria Revenue Service, the Nigeria Customs Service, the Federal Ministry of Industry, Trade and Investment, the Joint Revenue Board, the Manufacturers Association of Nigeria, the Tax Advisory Committee and the Tax Justice and Governance Platform.
Expressing confidence in the committee, Oyedele said the mix of expertise from both the public and private sectors would ensure the development of a technically sound and practical instrument capable of supporting effective VAT administration under the new tax regime.
“Nigerians cannot wait. Businesses need certainty. Investors need confidence. Government needs a VAT system that is easy to administer and supports growth. I urge you to approach this assignment with diligence, objectivity and a sense of urgency,” he said.
He added that the committee’s recommendations would play a critical role in improving the ease of doing business, strengthening investor confidence and advancing the Federal Government’s fiscal reform agenda.
(The Whistler)