Proposed tax reform bills not designed to undermine northern region – Presidency

In response to the opposition from the Northern Governors’ Forum regarding the new derivation-based model for Value-Added Tax, VAT, distribution, the Presidency has clarified that the proposed tax reform bills aim to benefit all states in Nigeria.

This statement, issued by Bayo Onanuga, Special Adviser to the President on Information & Strategy on Thursday, October 31, addresses the concerns raised by governors of 19 Northern states during their recent meeting on October 28, 2024, which was attended by traditional rulers led by the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III.

The reform initiatives, endorsed by President Bola Tinubu and the Federal Executive Council, are designed to streamline Nigeria’s tax administration processes and enhance efficiency across federal, state, and local jurisdictions.

The National Assembly is currently reviewing four executive bills aimed at modernizing the nation’s tax landscape. These include the Nigeria Tax Bill, which seeks to eliminate multiple taxation; the Nigeria Tax Administration Bill, NTAB, which aims to harmonize tax processes; the Nigeria Revenue Service (Establishment) Bill, proposing to rename the Federal Inland Revenue Service, FIRS, as the Nigeria Revenue Service; and the Joint Revenue Board Establishment Bill, which aims to create a Joint Revenue Board to coordinate tax authorities.

The proposed laws will not introduce new taxes or increase existing tax rates; instead, they will optimize and simplify current tax frameworks, ensuring equitable distribution of tax obligations. The reforms also focus on improving coordination among tax authorities to reduce inefficiencies and overlapping responsibilities.

Furthermore, the new derivation model for VAT distribution seeks to address inequities by considering the place of supply or consumption, ensuring that Northern states producing essential goods are not disadvantaged.

The Presidency emphasizes that these reforms are crucial for enhancing the lives of Nigerians and urges the National Assembly to prioritize their consideration to foster economic development and create necessary revenue for all levels of government.