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NewsGovernors Propose New VAT Sharing Formula To Back Tinubu Controversial Tax Reform.

Governors Propose New VAT Sharing Formula To Back Tinubu Controversial Tax Reform.

January 16, 2025

By Idris Buba

The thirty-six State Governors, on Wednesday brainstormed with the federal government on the tax reform bills forwarded to the National Assembly by President Bola Tinubu and proposed a new sharing formula if the tax reform bills must become law.

The Governors, under the aegis of the Nigeria Governors’ Forum, NGF at the end of a meeting of Subnational consultations and engagement in Abuja with the Chairman of Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, threw their weight behind the continuation of the legislative process at the National Assembly.

In a Communique signed by the NGF Chairman and Governor of Kwara State, Abdulrahman Abdulrazaq, said that the Forum endorsed a revised Value Added Tax, VAT, sharing formula to ensure equitable distribution of resources based on 50% for equality, 30%, for derivation and for population 20% .

The Governors, resolved that VAT rates should not be increased and there should be no reduction in Corporate Income Tax at this time in order to maintain economic stability, they also called for the continued exemption of essential goods and agricultural produce from VAT as that would help safeguard the welfare of citizens and promote productivity agriculture sector.

The Governors also recommended that there should be no terminal clause for 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.

The Communique issued at the end of the meeting 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.

READ MORE; FG, States, LGCs Share N1.4Trillion From N2.6Trillion For October 2024.

“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 meeting supports the continuation of the legislative process at the National Assembly that will culminate in. the eventual passage of the Tax Reform Bills.”

Following the recommendations of the Presidential Committee on Fiscal and Tax Reforms headed by Taiwo Oyedele for the review of existing tax laws, President Tinubu had on October 3, 2024, transmitted four tax reform bills to the National Assembly for consideration.

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