GOVERNORS BACK TINUBU’S TAX REFORM, PROPOSE NEW VAT SHARING FORMULA
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GREATRIBUNTVNEWS–In a significant development, the Nigeria Governors’ Forum (NGF) has thrown its weight behind President Bola Tinubu’s tax reform bills, proposing a new Value Added Tax (VAT) sharing formula. The thirty-six State Governors, under the NGF, brainstormed with the federal government on the tax reform bills, which are currently before the National Assembly.
The proposed VAT sharing formula aims to ensure equitable distribution of resources, with 50% based on equality, 30% based on derivation, and 20% based on population. The Governors have also resolved to maintain the current VAT rate and Corporate Income Tax (CIT) to ensure economic stability.
Key recommendations from the NGF include:
– *No increase in VAT rate or reduction in CIT* to maintain economic stability
– *Continued exemption of essential goods and agricultural produce from VAT* to safeguard citizens’ welfare and promote agricultural productivity
– *No terminal clause for TETFUND, NASENI, and NITDA* in the sharing of development levies in the bills
The Communique 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 NGF’s endorsement of the tax reform bills is a significant step towards modernizing Nigeria’s tax system and enhancing fiscal stability.
