Lucky Obukohwo, Reporting
The Nigeria Governors’ Forum (NGF) has okayed a revised Value Added Tax (VAT) sharing formula aimed at promoting equitable resource distribution among states.
The new formula gives 50 percent based on equality, 30 percent based on derivation and 20 percent based on population.
This decision was reached at the end of the Subnational Consultations and Engagement Presidential Tax Reform Committee, according to a communique issued by chairman of the Forum and Governor of Kwara State, Abdul Rahman Abdul Razaq.
NGF also agreed to maintain current VAT rates and exempt essential goods from VAT, ensuring economic stability while safeguarding citizens’ welfare. The resolutions support ongoing legislative efforts to pass comprehensive tax reform bills in the National Assembly.
According to the communique: “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 percent based on equality, 30 percent based on derivation, and 20 percent 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.”