In a significant development, the Nigeria Governors’ Forum (NGF) has thrown its weight behind the proposed tax reform bills currently before the National Assembly. The governors also proposed a revised Value Added Tax (VAT) sharing formula, which they claim will ensure equitable distribution of resources.
The proposed VAT sharing formula according to Brooom Nigeria(BN) allocates 50% of VAT revenue based on equality, 30% based on derivation, and 20% based on population. This move is seen as a major step towards reforming Nigeria’s tax system and enhancing fiscal stability.
The NGF also reiterated its support for the comprehensive reform of Nigeria’s archaic tax laws, acknowledging the importance of modernizing the tax system to align with global best practices. The governors 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.
Other key resolutions from the NGF meeting include the continued exemption of essential goods and agricultural produce from VAT, and the removal of terminal clauses for TETFUND, NASENI, and NITDA in the sharing of development levies.
BN believes that the NGF’s endorsement of the tax reform bills is a significant milestone in Nigeria’s efforts to reform its tax system and promote economic growth. The proposed VAT sharing formula is expected to be a key area of focus in the coming days, with various stakeholders set to weigh in on the proposal.
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