ABUJA, Nigeria—Nigeria’s Federal Government has reassured governors from 19 northern states that the proposed tax reforms, currently before the National Assembly, will benefit all states by creating a fairer, more efficient tax structure.
This assurance follows a National Economic Council, NEC, recommendation to withdraw the current tax bills for broader stakeholder consultations, responding to concerns raised by the Northern Governors’ Forum, NGF, over a new VAT derivation model.
During the NEC meeting presided over by Vice President Kashim Shettima, Governor Seyi Makinde of Oyo State announced that the council agreed on the importance of consulting stakeholders to build consensus.
“The council therefore recommends the need to withdraw the bill currently before the National Assembly on tax reforms so we can have wider consultations,” Makinde said, underscoring the aim for an inclusive approach.
Federal Government’s Response to Northern Governors’ Concerns
Days prior, Northern governors had expressed opposition to the proposed derivation-based VAT distribution model, which prioritises VAT distribution based on where goods are supplied or consumed rather than where tax is remitted.
Speaking on behalf of the governors, Gombe State Governor Muhammed Yahaya argued that the model could disadvantage northern states, which produce a significant share of agricultural products that are often VAT-exempt.
Responding, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, explained that the revised VAT model is intended to address “inherent inequities” in the existing system, which has historically favoured states with higher tax remittances.
“This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states,” Onanuga clarified, adding that the reforms were structured to support all regions without bias.
Overview of the Proposed Tax Reform Bills
The federal government’s comprehensive tax reforms, developed after reviewing existing tax laws since August 2023, consist of four executive bills:
- Nigeria Tax Bill: Aims to eliminate double taxation and make the Nigerian economy more competitive by simplifying tax obligations.
- Nigeria Tax Administration Bill (NTAB): Seeks to harmonise tax administration processes across federal, state, and local levels for streamlined compliance.
- Nigeria Revenue Service (Establishment) Bill: Proposes renaming the Federal Inland Revenue Service (FIRS) to Nigeria Revenue Service (NRS) to reflect its mandate as the revenue agency for the entire federation.
- Joint Revenue Board Establishment Bill: Proposes establishing a Joint Revenue Board (JRB) to coordinate federal and state tax authorities, including a Tax Ombudsman Office for complaint resolution.
Onanuga emphasised that these reforms do not propose new taxes or higher rates but instead focus on simplifying and coordinating existing tax structures to reduce redundancy.
“The tax rates or percentages will remain the same under these reforms, which aim to ensure equitable tax obligations without adding to Nigerians’ financial burdens,” he stated.
The reforms also address efficiency and job creation by unifying tax administration and minimising overlaps among federal, state, and local tax authorities.
“Without reform, the inefficiency will persist,” Onanuga said.
The federal government asserts that these changes are essential to modernise Nigeria’s tax system, ultimately benefiting all states and contributing to national development.
While consultations continue, the administration remains committed to fostering understanding and building an equitable tax system that serves the interests of every region.
