Kehinde Fajobi
The Nigeria Governors’ Forum (NGF) has pledged support for President Bola Tinubu’s proposed tax reform bills, recommending adjustments to the Value Added Tax (VAT) sharing formula and rejecting increases to VAT rates.
Following a meeting on 16 January 2025 with the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, the governors endorsed the continuation of the legislative process for the tax reform bills currently at the National Assembly.
In a communiqué signed by NGF Chairman and Kwara State Governor AbdulRahman AbdulRazaq, the governors proposed a revised VAT sharing formula of 50% based on equality, 30% on derivation, and 20% on population to ensure equitable resource distribution.
“We, members of the Nigeria Governors’ Forum, reiterated our strong support for comprehensive reform of Nigeria’s archaic tax laws,” the communiqué read.
“The Forum endorsed a revised VAT sharing formula and agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax at this time to maintain economic stability.”
The governors also called for the continued VAT exemption of essential goods and agricultural produce to protect citizens’ welfare and boost agricultural productivity.
Additionally, the communiqué recommended removing terminal clauses for development levies involving the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA).
The NGF expressed strong support for the bills, which include the Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill.
The bills aim to modernise Nigeria’s tax system, provide a clear legal framework for taxation, and establish new structures like the Nigeria Revenue Service and a tax tribunal.
President Tinubu had previously rejected a request from the National Economic Council (NEC) to withdraw the bills for wider consultation, insisting on allowing the legislative process to proceed.
The Senate passed the bills for second reading on 28 November 2024.
The NGF described the proposed reforms as crucial for fiscal stability and alignment with global best practices.