Nigerian Governors Endorse Tax Reform Bills, Unveil New VAT Sharing Formula

Nigerian Governors Endorse Tax Reform Bills, Unveil New VAT Sharing Formula

JOEL OLADELE, Abuja

The Nigeria Governors’ Forum (NGF) has officially endorsed the proposed tax reform bills currently under consideration at the National Assembly.

This decision emerged from a meeting held on Thursday, with the presidential tax reform committee, where key national issues including fiscal policy reform were thoroughly discussed.

In a statement released after the meeting, the NGF made it clear that the modernization of Nigeria’s tax system is critical.

The Forum’s chairman, AbdulRahman AbdulRazaq, who is also the Governor of Kwara State, stated in the communique, “We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee… arrived at the following resolutions: The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.”

Highlighting the importance of the proposed changes, the statement added, “Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices.”

A standout feature of the meeting was the proposal for a new Value Added Tax (VAT) sharing formula designed to promote fairness among the states. The NGF has recommended that VAT allocations be distributed as follows: 50% based on equality, 30% based on derivation, and 20% based on population.

“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources,” AbdulRazaq explained.

In light of current economic conditions, the Forum reached a consensus to maintain existing VAT rates and avoid reducing Corporate Income Tax (CIT).

“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 statement noted.

Additionally, the Forum expressed its commitment to protecting citizens’ welfare through continued exemptions for essential goods and agricultural products from VAT, which they believe will bolster agricultural productivity. “The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens,” the chair emphasized.

The meeting also included recommendations regarding the development levies from TETFUND, NASENI, and NITDA, advocating for the removal of any terminal clause related to their funding.

In conclusion, the NGF is fully supportive of the legislative process aiming for the successful passage of the Tax Reform Bills. “The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills,” NGF affirmed.