Nigeria Governors’ Forum Endorses Tax Reform Bills, Proposes New VAT Sharing Formula

The Nigeria Governors’ Forum (NGF) has expressed strong support for the tax reform bills submitted by President Bola Tinubu to the National Assembly. This decision was announced in a communiqué issued on Thursday, following a meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, in Abuja.

In the communiqué, signed by NGF Chairman and Kwara State Governor Abdulrahman Abdulrazaq, the forum proposed a revised Value-Added Tax (VAT) sharing formula to ensure equitable distribution of resources:

50% based on equality

30% based on derivation

20% based on population

The governors emphasized the importance of modernizing Nigeria’s tax system to enhance fiscal stability and align with global best practices. They 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. Additionally, the forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard citizens’ welfare and promote agricultural productivity.

Regarding development levies, the governors recommended that there should be no terminal clause for the Tertiary Education Trust Fund (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, leading to the eventual passage of the tax reform bills.

This endorsement by the NGF marks a significant step toward comprehensive tax reform in Nigeria, aiming to create a more equitable and efficient fiscal framework for the nation.