The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has assured the 19 northern governors in Nigeria that they will benefit from the proposed Tax Reform Bill.
In a post on X (formerly Twitter) on Tuesday, Oyedele stated that his committee shared the sentiment expressed by the Northern governors regarding the “inequity inherent in the current model of derivation as a basis for distributing VAT revenue.”
During a meeting with traditional leaders and various stakeholders on Monday, the Northern Governors’ Forum turned down the Tax Reform Bill sent to the National Assembly.
The 19 governors said that the suggested legislation did not favour the interests of the North and other subnationals, particularly concerning the proposed change to the allocation of Value Added Tax (VAT) to a derivation-based model.
Responding, Oyedele said, “This issue, in fact, affects many states across all geopolitical zones because the current derivation is mainly determined based on where VAT is remitted, rather than where goods or
services are supplied or consumed.
“Our proposal aims to create a fairer system by devising a different form of derivation which takes into account the place of supply or consumption for relevant goods and services whether they are zero-rated, exempt or taxable at the standard rate.
“For example, a state that produces food shouldn’t lose out just because its products are VAT-exempt or consumed in other states. The state where the supply originates should be recognised for its contributions. The same principle should apply to services like telecommunications—VAT distribution should reflect where subscribers are located.
“We will collaborate with all stakeholders to address this concern with a view to finding a balanced solution that achieves a win-win outcome for all.”