The Nigerian governors and the Presidential Tax Reform Committee have finally come to term on the newly proposed Nigerian revenue sharing formula, which has been a contentious topic since its disclosure.
The 36 states governors of the federation and the Presidential Tax Reform Committee, on Thursday, agreed on modalities for sharing the Value Added Tax (VAT) after several weeks of controversy and diverse opinion.
The governors endorsed the sharing of the VAT proceeds on the basis of 50 per cent equality, which is same as the current; 30 per cent derivation, from 20 per cent currently in operation and 60 per cent that was proposed by the Presidential Tax Reform Committee headed by Mr. Taiwo Oyedele.
Also, the governors unanimously agreed on 20 per cent sharing on population basis, from 30 per cent which is the current allocation before the tax reform proposal was made. The reform proposal follows the projection of N100 trillion aggregate expenditure for the 2026 fiscal year by the Senate. The red chamber also vowed to free funds it said were being held by some government organizations.
The communique of the governors’ meeting with members of the Presidential Tax Reform Committee in Abuja, held behind closed-doors, was signed by Chairman of Nigeria Governors’ Forum (NGF) and Governor of Kwara State, Alhaji Abdul Rahman Abdul Razaq.
The communique stated, “The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.
“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.
“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, arrived at more resolutions.
“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.”
The meeting marked a significant milestone since the tax reform proposal was initiated as the as the northern states’ governors, emirs and chiefs had last year rejected the proposed tax amendment bills sent to the National Assembly by the federal government.
