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Governors Advocate Tax Reforms, Endorse Revised VAT Sharing Formula

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Governors Advocate Tax Reforms, Endorse Revised VAT Sharing Formula

By Matthew Eloyi

The Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee have reiterated their commitment to the reform of Nigeria’s tax system, emphasising the need to modernise outdated fiscal policies to enhance economic stability.

This was disclosed in a communiqué issued at the end of their consultative meeting held on January 16, 2025, and signed by the Chairman of the NGF, Governor AbdulRahman AbdulRazaq of Kwara State.

The governors expressed unanimous support for comprehensive tax reforms, underscoring the importance of aligning Nigeria’s tax laws with global best practices. They agreed that a revamped tax system would promote fiscal stability and drive economic growth.

A significant highlight of the meeting was the endorsement of a revised Value Added Tax (VAT) sharing formula. The proposed structure ensures a more equitable distribution of resources, with allocations based on equality (50%), derivation (30%), and population (20%).

The Forum also recommended maintaining the current VAT rate and Corporate Income Tax (CIT) levels to preserve economic stability. It further advocated for the continued exemption of essential goods and agricultural produce from VAT to protect citizens’ welfare and boost agricultural productivity.

In addition, the governors opposed the inclusion of terminal clauses for development levies allocated to agencies such as the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA).

The meeting expressed strong support for the legislative process at the National Assembly aimed at the eventual passage of the Tax Reform Bills. The governors noted that these reforms are crucial for addressing fiscal challenges and fostering sustainable economic growth.

The communiqué underscores the NGF’s commitment to engaging stakeholders at all levels to ensure the successful implementation of these critical reforms.

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