Revolutionizing Taxation: Governors Endorse Major VAT Reform For Fairer Resource Sharing

Revolutionizing Taxation: Governors Endorse Major VAT Reform For Fairer Resource Sharing

The Nigeria Governors’ Forum (NGF) has thrown its weight behind the proposed tax reform bills under consideration at the National Assembly, emphasizing the need for an equitable Value-Added Tax (VAT)

…Revolutionizing Taxation: Governors Endorse Major VAT Reform For Fairer Resource Sharing

sharing formula.

In a statement issued on January 16, 2025, following a meeting with the Presidential Tax Reform Committee, the NGF outlined key resolutions aimed at enhancing Nigeria’s fiscal stability and ensuring fair resource distribution among states.

Key Highlights:

• Support for Tax Reforms: The NGF endorsed the overhaul of Nigeria’s outdated tax laws to improve revenue generation and align with global standards.
• Equitable VAT Sharing Formula: Proposed allocation includes:
  • 50% based on equality,
  • 30% based on derivation, and
  • 20% based on population.
• No VAT Rate Increase: The governors advised against raising VAT rates or reducing Corporate Income Tax (CIT) to maintain economic stability.
• Exemptions to Protect Citizens: Essential goods and agricultural products should remain exempt from VAT to safeguard citizens’ welfare and promote agriculture.
• Sustained Development Funding: Recommendations included continued funding for TETFUND, NASENI, and NITDA without terminal clauses in development levy-sharing agreements.

The NGF reaffirmed its commitment to working with the National Assembly to ensure the successful passage of the tax reform bills. The Forum emphasized that the proposed changes would address economic disparities and promote long-term fiscal sustainability for Nigeria.

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