NGF Backs Comprehensive Tax Reforms, Proposes Revised VAT Sharing Formula

The Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee have reaffirmed their commitment to overhauling the nation’s tax system. This resolution was reached at a subnational consultation held on 16 January 2025, where members deliberated on fiscal policies and reforms.

The Forum strongly endorsed the modernisation of Nigeria’s outdated tax laws, citing the need to enhance fiscal stability and align with global best practices. In a major decision, members agreed on a revised Value Added Tax (VAT) sharing formula, aimed at promoting equity in resource allocation. Under the proposed formula, 50% of VAT revenue would be allocated based on equality, 30% on derivation, and 20% on population.

The NGF further resolved that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, prioritising economic stability. Essential goods and agricultural produce are to remain exempt from VAT, a measure designed to protect citizens’ welfare and encourage agricultural development.

On development levies, the Forum recommended the exclusion of terminal clauses for key institutions such as the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA) to ensure their continued access to funding.

Additionally, members expressed their support for the legislative processes at the National Assembly that are expected to culminate in the passage of the Tax Reform Bills.

The communiqué was signed by the Chairman of the NGF and Governor of Kwara State, H.E. AbdulRahman AbdulRazaq, reaffirming the Forum’s dedication to achieving sustainable economic reforms for the country.

Odigie Ehidiamen Kelvin