Presidency Debunks Northern Region Tax Reform Concerns

Tax Reform Bills Not Targeting North, Says Presidency

Presidency maintains that the reform initiatives, endorsed by President Tinubu and the Federal...

Clarifying VAT reforms: Presidency assures Northern Governors' Forum of fair revenue distribution, streamlined tax administration.

The Nigerian Presidency has addressed concerns raised by the Northern Governors' Forum regarding the proposed derivation-based model for Value-Added Tax (VAT) distribution. In a statement issued by Bayo Onanuga, Special Adviser to the President on Information & Strategy, the Presidency clarified that the tax reform bills aim to benefit all states in Nigeria, not just a select few.

The Northern Governors' Forum had rejected President Bola Tinubu's proposed shift to a derivation-based VAT model, citing concerns that it would disadvantage northern and other less industrialized regions. The governors argued that the current system, where VAT is remitted based on company headquarters' locations rather than where goods and services are consumed, already creates disparities in revenue distribution. They believe the proposed model would further marginalize the North and other less industrialized regions.

However, the Presidency maintains that the reform initiatives, endorsed by President 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 proposed reforms are intended to promote national growth and development, while ensuring fairness and equity in revenue distribution.

Highlights 

Presidency's Response: The proposed tax reform bills aim to benefit all states in Nigeria.

Northern Governors' Concerns: The derivation-based VAT model would disadvantage northern and other less industrialized regions.

Reform Objectives: Streamline tax administration, enhance efficiency, and promote national growth and development.

The Nigerian government is taking significant steps to modernize its tax landscape. Four executive bills are currently being reviewed by the National Assembly, aiming to streamline and optimize the tax system.

Reform Bills:

Nigeria Tax Bill: Seeks to eliminate multiple taxation, ensuring businesses and individuals don't face redundant tax burdens.

Nigeria Tax Administration Bill (NTAB): Aims to harmonize tax processes, reducing complexities and inefficiencies.

Nigeria Revenue Service (Establishment) Bill: Proposes renaming the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service, promoting a more unified and coordinated approach.

Joint Revenue Board Establishment Bill: Creates a Joint Revenue Board to oversee and coordinate tax authorities, minimizing overlapping responsibilities.

These reforms prioritize simplification and equity, rather than introducing new taxes or increasing existing rates. The goal is to create a fair and efficient tax system, where obligations are distributed evenly and authorities work together seamlessly. This overhaul is expected to boost economic growth and transparency.

The Nigerian Presidency has clarified that the new VAT distribution model is designed to address inequities by considering the place of supply or consumption, ensuring Northern states producing essential goods aren't disadvantaged. This move aims to promote fairness and equity in revenue distribution. 

The proposed reforms are crucial for enhancing the lives of Nigerians, and the Presidency is urging the National Assembly to prioritize their consideration. By streamlining tax administration and enhancing efficiency across federal, state, and local jurisdictions, these reforms will foster economic development and create necessary revenue for all levels of government.

Benefits of the New VAT Distribution Model:

Fairness and Equity: Ensures Northern states producing essential goods aren't disadvantaged

Economic Development: Fosters economic growth and development across all regions

Revenue Generation: Creates necessary revenue for all levels of government

Streamlined Tax Administration: Enhances efficiency across federal, state, and local jurisdictions

The Northern Governors' Forum had initially expressed concerns that the new derivation-based VAT model would disadvantage Northern states. However, the Presidency's clarification has addressed these concerns, emphasizing the benefits of the new model for all states.