After months of back and forth, the Nigerian Governors Forum (NGF) has endorsed the tax reforms bill and provided key recommendations for the VAT sharing formula.
The NGF has recommended that the VAT sharing formula which has been a major grey area in the bill should be as follows – 50% based on equity, 30% based on derivation, and 20% based on consumption.
NGF Statement
The communiqué, signed by the chairman of the NGF, Governor AbdulRahman Abdulrazak of Kwara State, released after a meeting with the Presidential Fiscal Policy and Tax Reform Committee on Thursday in Abuja.
The communiqué read, “We, members of the Nigeria Governors’ Forum (NGF) and Presidential Tax Reform Committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following resolutions:
“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 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 Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.
“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the 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.”
Significance
With the NGF who have been one of the most vociferous opposers of the bill finally giving a go-ahead to the bill, deliberations on the Tax reforms bill at the National Assembly that was initially step down due to controversies is set to continue and it seems the bill would finally see the light of the day.
