NGF endorses revised VAT sharing formula to promote equity

• Insists on maintaining current VAT rate

From Juliana Taiwo-Obalonye, Abuja

The Nigeria Governors’ Forum (NGF) has endorsed a revised Value Added Tax (VAT) sharing formula aimed at promoting equitable resource distribution among states.

The new formula allocates 50% based on equality, 30% based on derivation, and 20% based on population.

This decision was reached at the end of Subnational Consultations and Engagement of the Presidential Tax Reform Committee, according to the communiqué issued by the Chairman of the Nigeria Governors’ Forum and Governor of Kwara State, Abdul Rahman Abdul Razaq.

The Forum also agreed to maintain the 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.

The communiqué read thus: “We, members of the Nigeria Governors’ Forum (NGF) and the 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% 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 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.”