*Okay 30% derivation, 20% based on population

Chuks Okocha in Abuja

At last the 36 states governors have agreed with the Presidential Tax Reform Committee on the modalities of sharing the Valued Added Tax (VAT) and the 30 percent based derivation.

Also the governors endorsed the sharing of the proceeds of the VAT on a 20 basis on the population.

The communique of the Governors meeting with the members of the Presidential Tax Reform Committee in Abuja and signed by the chairman of the Nigeria Governors forum (NGF) Abdul Rahman AbdulRazaq, said, ”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 communique further said that “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”.

Consequently, the communique said, ”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, and arrived at the following 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.”

Thursday’s meeting meeting between the governors and members of the committee was a major break through as the northern states governors, Emirs and Chiefs had last year rejected the proposed Tax Amendment Bill sent to the National Assembly by the federal government, saying it is capable of jeopardizing the wellbeing of the people in the region.
The Northern leaders said they were not against any policy that would ensure the growth and development of the country, but called for equity and farness in the implementation of all national policies and programmes to ensure that no geopolitical zone is marginalized.

The Chairman of the Northern Governors Forum, Governor Muhammadu Yahaya of Gombe State, after the forum’s joint meeting with traditional council in Kaduna had signed a communique which said:, Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the bill are against the interests of the north and other sub-nationals especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model.

”This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and call on members of National Assembly to oppose any bill that can jeopardize the well-being of our people.

For the avoidance of doubt, the Northern Governor Forum is not averse to any policies or programmes that will ensure the growth and development of the Country. However, the Forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalized, the northern leaders hd stated then.

Thursday’s meeting was held behind closed doors.

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