Just in: Governors reject VAT increase, back passing of Tax Reform Bills

Just in: Governors reject VAT increase, back passing of Tax Reform Bills  

The Nigeria Governors’ Forum (NGF) has rejected the move to increase Value Added Tax (VAT) and proposed an “equitable” sharing formula for the collected revenue.

The governors however expressed support for the ongoing legislative process of the Tax Reform Bills.

These were the outcomes of a meeting between the NGF and the Presidential Tax Reform Committee, convened on Thursday to discuss critical national issues, including the reform of Nigeria’s fiscal policies and tax system.

A statement signed by the Chairman of the Forum and Governor of Kwara State, Abdulrahman AbdulRazaq said, “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:

“1. 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.

“2. 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.

“3. 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 the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“4. The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.

“5. 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.”