JUST IN: Nigerian governors back Tinubu’s tax reform bills but reject VAT increase

...propose new VAT sharing formula

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The Nigeria Governors’ Forum (NGF) has expressed support for the proposed tax reform bills, but rejected in entirety moves to increase Value Added Tax (VAT). 

NewsClick Nigeria reports reports that President Bola Tinubu on October 3, 2024, forwarded the tax reform bills to the Senate and House of Representatives for approval.

The tax reform bills―which are The Nigeria Tax Bill 2024; The Nigeria Tax Administration Bill 2024; The Nigeria Revenue Service (Establishment) Bill 2024; and The Joint Revenue Board (Establishment) Bill 2024―were passed for second reading in the Senate on November 28, 2024.

However, the bills have since generated controversies with the NGF calling for its withdrawal for proper consultations.

However, in a statement on Thursday, the Forum expressing legislative support for the bills, proposed an “equitable” sharing formula for value-added tax (VAT).

The development was an outcome of a meeting between the NGF and the presidential tax reform committee, convened on Thursday, (today) January 16, 2025, to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system.

According to the statement, the governors recommended that there should be no terminal clause for TETFUND, National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the sharing of development levies in the bills.

They also supported the continuation of the legislative process at the national assembly that will culminate in the eventual passage of the tax reform bills.

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices,” the statement reads.

“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality,

30% based on derivation, and 20% based on population.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.”

The group advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.