Breaking: Nigerian Governors Back Tax Reform, Propose New VAT Sharing Formula

    Gov. AbdulRahman Abdulrazak, NGF Chairman              

    The Nigerian Governors Forum (NGF) has announced its support for the proposed tax reform bills, currently being reviewed by the National Assembly. In a meeting with the presidential tax reform committee on January 16, 2025, the governors also presented key recommendations, including a revised formula for sharing value-added tax (VAT).

In a statement following the meeting, the NGF emphasized the need to modernize Nigeria’s outdated tax system, aligning it with global standards to enhance fiscal stability. The governors called for a VAT sharing structure that ensures fairness: 50% allocated equally among states, 30% based on derivation, and 20% determined by population.

The NGF also opposed increasing the VAT rate or reducing Corporate Income Tax (CIT), citing concerns over economic stability. Additionally, they urged the continued exemption of essential goods and agricultural products from VAT to protect citizens and boost agricultural growth.

The governors further recommended that organizations like TETFUND, NASENI, and NITDA remain integral to the allocation of development levies, without any termination clauses in the reform bills.

By endorsing these reforms, the NGF aims to foster economic stability and ensure a more equitable distribution of resources across Nigeria.


COMMUNIQUE ISSUED AT THE END OF THE SUBNATIONAL CONSULTATIONS AND ENGAGEMENT WITH THE PRESIDENTIAL TAX REFORM COMMITTEE.

We, members of the Nigeria Governors’ Forum (@NGFSecretariat) 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:

1. 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.

2. 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.

3. 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.

4. The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.

5. 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.

𝐒𝐢𝐠𝐧𝐞𝐝
H.E. @RealAARahman CON
Chairman, Nigeria Governors’ Forum & Governor of Kwara State.


    Tinubu, President of Nigeria



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