FG Sets Up Committee to Rewrite Nigeria's VAT Rules in Six Weeks

Nigeria's Finance Minister just started a clock that matters to every shopper, landlord and business owner in the country. On Friday, July 24, 2026, in Abuja, Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, inaugurated an Inter-Ministerial Committee to draft a new Value Added Tax Modification Order for 2026. The panel has just six weeks to finish the job.

Why does this matter now? Because it decides which goods and services carry VAT, and which don't, under the Tax Reform Acts that took effect on January 1, 2026. Get the list wrong, and either households pay more for essentials or the government loses revenue it badly needs. Get it right, and Nigeria locks in one of the cheapest VAT regimes in Africa while keeping the books balanced.

Why This Committee Exists Now

Nigeria overhauled its entire tax system last year. Four laws, signed by President Bola Tinubu on June 26, 2025, replaced older statutes including the original VAT Act. Those laws are the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service Establishment Act and the Joint Revenue Board Establishment Act.

That created a gap. The old VAT Modification Order, the document that spells out exemptions and zero-rated items, was written for a law that no longer exists. Oyedele said the previous order had served its purpose, but the shift to the Nigeria Tax Act, 2025, made a new one necessary. He was direct about the goal: this isn't about reproducing an old document, it's about building one that's clear, practical and responsive to a changing economy.

In plain terms, the committee is filling a legal blank. Without a valid order, businesses and tax officers are left guessing on classification disputes, the kind that end up in court or in disputed assessments.

Who's in the Room, and Why It Matters

Members are drawn from 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.

Regulators sit alongside manufacturers and a civil-society tax-justice group. Compare this to the 2025 reform process itself, which drew criticism for moving fast through the National Assembly with limited public consultation before the political concessions, like exempting minimum-wage earners from income tax, were added. This time, the government appears to be front-loading stakeholder input rather than bolting it on afterward.

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Still, an open question remains: how much real influence will manufacturers versus tax-justice advocates have when their interests clash? A manufacturer wants broad input VAT recovery. A justice advocate wants exemptions that protect the poorest households. Both can't fully win.

What the Committee Must Actually Deliver

The committee's core mandate is to produce a modern, coherent VAT Modification Order that complements the new law and supports Nigeria's economic transformation.

Its task list, drawn from the ministry's own statement, breaks down into five concrete jobs:

• Review the current VAT administration setup and flag confusing areas
• Consult businesses and civil society to confirm how goods and services get classified
• Build updated lists of VAT-exempt and zero-rated supplies
• Draft the actual Modification Order, ready to implement
• Recommend legislative tweaks where the underlying law itself needs fixing

The minister set five guiding principles for the work: fidelity to the law, growth-oriented design, clarity and certainty, broad stakeholder engagement, and international benchmarking. Notice what's missing from that list: revenue maximisation isn't named as a standalone principle. That's a signal, intentional or not, that this isn't primarily a revenue-raising exercise.

The VAT Rate Isn't Changing, But the List Around It Is

Nigeria's headline VAT rate stays at 7.5%. That's the lowest among Nigeria's key regional peers, well below Kenya's 16% and Ghana and South Africa's 15%, according to Oyedele, who also chairs the Presidential Fiscal Policy and Tax Reforms Committee.

That's a reversal from the original plan. The reforms were initially pitched with a path to lift VAT gradually to 12.5% by 2026, but lawmakers held the rate at 7.5% and leaned instead on relief for basic goods and services.

So the real battleground isn't the rate. It's the exemption list. From January 1, 2026, food and basic consumables became zero-rated, while healthcare, medicines, education services and passenger road transport became VAT-exempt. Rent, baby products, sanitary pads, fertiliser and renewable energy equipment also made the list

Those categories reportedly account for about 82% of household consumption, and close to all consumption for low-income households.

This committee decides whether that list expands, tightens or gets clarified with proper Harmonised System codes, which is where a lot of past disputes originated. Vague category names invite disagreement between taxpayers and tax officers over what actually qualifies.

What Happens If the Six-Week Deadline Slips

Six weeks is tight for a document that touches manufacturing, retail, healthcare, education and transport all at once. Nigeria's own reform history offers a caution. The broader 2025 Tax Reform Acts took roughly seven months from presidential assent to full effect, with parts phased in as late as January 2026.

If this committee needs an extension, expect friction. Businesses have already restructured invoicing systems around the January 2026 exemption categories. A late or contested VAT Modification Order forces another round of system updates and staff retraining, an avoidable cost if the timeline holds.

Unconfirmed at this stage: the committee's full membership list by name, the exact submission date to the minister, and whether the draft order will go through a public comment period before finalisation. None of the ministry statements reviewed confirm these details, so treat any claims about them elsewhere with caution until the ministry publishes them.

What This Means for You, Right Now

If you run a business selling any item on the exempt or zero-rated lists, watch for the committee's published output in early September 2026. That's when six weeks from July 24 lands.

If you're a household budgeting around cheaper food and healthcare costs, the current exemptions remain in force while the committee works. Nothing changes for you today.

If you're an accountant or tax adviser, this is the moment to flag ambiguous classifications to the Manufacturers Association of Nigeria or the Tax Advisory Committee, both of which sit on the panel and can carry industry concerns directly into the drafting room.