Nigerian Governors Approve Tax Reforms Bill, Reject Proposed VAT Sharing Formula

Nigerian governors have expressed support for the Federal Government’s tax reform bills while recommending a new formula for sharing value-added tax (VAT).

This decision was made during a meeting between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee on Thursday.

In a statement released after the meeting, the governors emphasized their commitment to overhauling Nigeria’s outdated tax system.

The governors noted that modernizing tax laws is crucial for fiscal stability and aligning with global standards

It said, “Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices”.

The proposed VAT-sharing formula includes 50% allocated equally among states, 30% based on derivation, and 20% according to 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 communique issued by the Chairman of the NGF and Governor of Kwara State Abdul Rahman Abdul Razaq read.

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

Additionally, the forum advocated for continued VAT exemptions on essential goods and agricultural products to protect citizens’ welfare and encourage farming activities.

The governors also recommended that development levies shared by agencies like TETFUND, NASENI, and NITDA should not have terminal clauses, ensuring their continued funding.

Despite ongoing debates, the NGF expressed support for the legislative process on the tax reform bills and urged their eventual passage by the National Assembly.

President Bola Tinubu had earlier submitted four tax reform bills to the National Assembly, including the tax administration bill, Nigeria tax bill, and joint revenue board establishment bill.

One of the proposals aims to replace the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service.

While the reforms have faced resistance, particularly from some northern governors and leaders who argue the bills are unfavorable to their region, Tinubu has stood firm.

The presidency insisted the bills are designed to benefit all Nigerians and improve the nation’s tax system.

KanyiDaily recalls that the Senate had ordered its Finance Committee to suspend further action on the proposed tax reform bill until after a crucial meeting with the Attorney General of the Federation (AGF).