The Nigeria Governors’ Forum (NGF) has officially rejected the proposed increase in Value Added Tax (VAT) from 7.5% to 10%, saying the move is untimely.
This decision was reached during a meeting in Abuja on Thursday, January 16, where the governors expressed support for the ongoing legislative process of the Tax Reform Bills currently before the National Assembly.
According to the communique signed by NGF Chairman and Governor of Kwara State, Abdulrahman Abdulrazaq, the forum proposed an equitable sharing formula for Value-Added Tax. The revised VAT sharing formula must ensure equitable distribution of resources, with 50% based on equality, 30% based on derivation, and 20% based on population.
As stated in the communique, “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 NGF reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws, acknowledging the importance of modernizing the tax system to enhance fiscal stability and align with global best practices. The forum also endorsed the revised VAT sharing formula and recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.
