Governors back Tinubu's tax reform bills, propose new VAT-sharing formula

The Nigeria Governor Forum (NGF) has greenlighted the tax reform bills of President Bola Tinubu for passage by the National Assembly.

The governors made their decision known in a statement issued at the end of a meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, in Abuja on Thursday, January 16, 2024.

Recall some governors had raised concerns over certain provisions in the four-part bills, especially the proposed sharing formula for Value-Added Tax (VAT).

Most of the complaints had been from the North as political and religious leaders in the region alleged systemic alienation from the nation's resources, calling on the President to withdraw the bills.

Following the outcry, the National Assembly halted further action on the passage of the bill to allow for wider consultations with stakeholders.

Governors approve Tinubu's tax reform bills

Meanwhile, in the communique signed by the NGF Chairman and Governor of Kwara State, AbdulRahman AbdulRazaq, the NGF proposed an equitable sharing formula for VAT.

They explain that the revised VAT sharing formula must ensure equitable distribution of resources of 50% based on equality, 30% based on derivation, and 20% based on population.

“We, members of the Nigeria Governors’ Forum 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 modernising the tax system to enhance fiscal stability and align with global best practices.

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“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 communique read partly.

Governors reject termination of TETFUND, NASENI, NITDA

The governors, however, rejected the proposed terminal clause for the 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.

At the same time, they declared express support for the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the tax reform bills.

On October 3, 2024, Tinubu transmitted the four tax reform bills to the National Assembly for consideration, following the recommendations of the Presidential Committee on Fiscal and Tax Reforms.

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