Governors back tax reform bills but reject VAT increase

The Nigeria Governors Forum (NGF) has rejected the move to increase Value Added Tax (VAT).  The forum made this known in a communiqu released after its meeting in Abuja on Thursday, Jan. 16.  The governors expressed support for the ongoing legislative process of the Tax Reform Bills currently before the National Assembly. However they opposed the Federal Governments proposal for an increase of VAT from 7.5% to 10% in one of the tax reform bills. They said the move is untimely.  In the communique signed by the NGF Chairman and Governor of Kwara State, Abdulrahman Abdulrazaq, the forum proposed an equitable sharing formula for Value-Added Tax. The governors said the revised VAT sharing formula must ensure equitable distribution of resources of 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 communique reads in part. 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 Nigerias fiscal policies and tax system, and arrived at the following resolutions:  The Forum reiterated its strong support for the comprehensive reform of Nigerias 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. 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 Nigerian Governors Forum (NGF) said. The post Governors back tax reform bills but reject VAT increase appeared first on Linda Ikeji Blog.