Governors Endorse Revised Tax Reform Bills As FG Slashes VAT Derivation Based Sharing From 60% To 30%

The Nigeria Governors Forum (NGF) has announced its decision to endorse a reviewed version of the controversial Tax Reform Bills pending before the National Assembly.

In the reviewed version, the sharing of VAT based on derivation has been slashed from 60 per cent as proposed in the original bill, to 30 per cent.

The decision to endorse the bills was a clear departure from the hardline posture earlier adopted by the governors when they called on President Bola Tinubu to withdraw the bills from the National Assembly.

The governor’s position was conveyed through a communiqué released after a meeting with the Presidential Fiscal Policy and Tax Reform Committee on Thursday in Abuja.

The communiqué, signed by the chairman of the NGF, Governor AbdulRahman Abdulrazak of Kwara State, called on the two chambers of the National Assembly to resume legislative work on the bills.

The communiqué 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.

“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.”

President Tinubu sent the four-pronged tax reform bills to the National Assembly in October 2024, seeking to overhaul the existing tax system.

The bills included the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

Apart from the governors, other key players, including some federal lawmakers, have kicked against the bills.

Governors Endorse Revised Tax Reform Bills As FG Slashes VAT Derivation Based Sharing From 60% To 30% is first published on The Whistler Newspaper