After months of debate over contentious tax reforms, Nigeria’s presidency and the 36 state governors have reached a consensus to scrap plans for increasing the Value Added Tax (VAT) rate. Instead, they have adopted a new revenue-sharing formula aimed at promoting equitable resource distribution.
The agreement was finalized during consultations with the Presidential Tax Reform Committee in Abuja. A communique issued by the Nigeria Governors’ Forum (NGF), led by Kwara State Governor AbdulRahman AbdulRazaq, outlined the new formula: 50% of VAT revenue will be shared equally, 30% will be allocated by derivation, and 20% based on population.
The governors firmly rejected proposals to raise VAT rates or reduce Corporate Income Tax (CIT), citing the need to protect economic stability. They also emphasized the importance of continuing VAT exemptions for essential goods and agricultural products.
Initial drafts of the tax reform bills had suggested a gradual VAT rate increase from 7.5% in 2025 to 15% by 2030, aiming to align Nigeria with other African nations. However, a controversial derivation clause that allocated VAT revenue based on company headquarters sparked heated debates.
The NGF expressed support for the ongoing legislative processes surrounding the tax reform bills but opposed provisions affecting development levies tied to TETFUND, NASENI, and NITDA.
Senator Natasha Akpoti-Uduaghan, chairperson of the Senate Committee on Local Content, attributed concerns in Northern Nigeria to fiscal unpreparedness. Speaking in Kaduna, she called on Northern leaders to revive the region’s agricultural and industrial sectors, drawing lessons from its economic successes in the 1950s.
Meanwhile, the Academic Staff Union of Universities (ASUU) has criticized a proposal under the 2024 Nigeria Tax Bill to divert TETFund allocations to the National Education Loan Fund (NELFUND). The union warned that reducing TETFund resources could undermine access to higher education and called on lawmakers to take swift action to safeguard funding.
At a symposium held in Kaduna, civil society groups and student associations discussed the tax reforms, urging Northern leaders to embrace the changes as a step toward regional self-sufficiency. They condemned the politicization of the reforms and advocated for transparent governance to address the region’s socio-economic challenges.
These developments underscore Nigeria’s ongoing efforts to balance fiscal reforms with economic equity, stability, and sustainable development.