BREAKING: Nigerian Governors Forum endorses revised VAT sharing formula, other tax reforms

The details were disclosed in a communiqué issued on Thursday and signed by AbdulRahman AbdulRazaq, Chairman of the Nigeria Governors’ Forum and Governor of Kwara State.

The communiqué was released at the end of sub-national consultations and engagements with the Presidential Tax Reform Committee and other relevant stakeholders including the Federal Inland Revenue Service.

The NGF endorsed a revised VAT-sharing formula aimed at the equitable distribution of resources:

Members also agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time.

This decision, they noted, was aimed at maintaining economic stability.

Furthermore, the communiqué stated that attendees supported the continuation of the legislative process at the National Assembly, which will culminate in the eventual passage of the Tax Reform Bills.

Naijaonpoint previously reported that the Northern Governors’ Forum, chaired by Gombe State Governor Muhammed Inuwa Yahaya, had rejected the derivation-based model for VAT distribution proposed in the new tax bill under deliberation at the National Assembly.

According to Oyedele, the current VAT distribution model is not only unfair to Northern states but also to states across all geopolitical zones.

He explained that the committee’s proposal aims to create a fairer system that considers where goods are consumed or supplied, irrespective of their VAT status.

Currently, under Section 40 of the VAT Act, VAT revenue is allocated as follows:   

While not explicitly stated in the VAT Act, other factors affecting the distribution include:   

Additionally, a 4% collection fee is allocated to the FIRS, and 2% to the NCS for import VAT.

The tax reform bills have already passed the second reading in the Senate.