Nigerian Governors Oppose Plans To Increase VAT Rate In Nigeria

Nigerian Governors have opposed any plans to increase VAT rate in Nigeria.

NaijaOnPoint Nigeria reports that the Nigeria Governors’ Forum (NGF) has opposed any plans to increase the Value Added Tax (VAT) rate in the country.

The forum, representing governors from all 36 states, articulated their stance during a meeting with the presidential tax reform committee held on Thursday to deliberate on critical fiscal and tax reform issues.

In a statement signed by the NGF Chairman and Governor of Kwara State, AbdulRahman AbdulRazaq, the governors emphasized their commitment to comprehensive tax reform while advocating against measures that could exacerbate economic challenges.

“We, members of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee, convened to deliberate on Nigeria’s fiscal policies and tax system. After extensive discussions, we arrived at the following resolutions,” the statement read.

“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 governors said.

Revised VAT Sharing Formula 
The governors proposed a revised VAT-sharing formula to ensure a fairer distribution of resources across states:

• 50% based on equality among states,

• 30% based on derivation (revenue generated from a state), and
• 20% based on population.

The forum recommended removing terminal clauses for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the allocation of development levies under tax reform bills.

The governors expressed their support for the ongoing legislative process at the National Assembly to finalise the Tax Reform Bills.

Governor AbdulRazaq stressed the importance of balancing fiscal reforms with the welfare of Nigerians. “Our tax reform efforts must reflect fairness, equity, and the need to protect our citizens, particularly during these economically challenging times,” he stated.

NaijaOnPoint Nigeria recalls that the current Tax Reforms bills before the National Assembly propose a progressive increase in VAT rates from 10% in 2025 to 12.5% (2026–2029) and 15% from 2030 onward.

• The proposed 2024 Tax Reform Bills stem from the recommendations of the Presidential Committee on Tax Reform, chaired by the renowned fiscal policy expert Mr. Taiwo Oyedele.
• The reform bills comprise four separate bills: the Nigeria Tax Bill (NTB), the Nigeria Tax Administration Bill (NTAB), the Nigeria Revenue Service Establishment Bill (NRSEB), and the Joint Revenue Board Establishment Bill (JRBEB).
• Several governors have earlier shown the opposition to the bills.

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