Tax Reforms Bills - Three States and FCT Reap Over 70% of VAT Revenue Under Current Tax Law - Zacch Adedeji

Background Information 

Present tax arrangement: VAT is credited to the head office of products and services. For instance, the head office of MTN is located in Lagos, therefore all the VATs accrued from across Nigeria on MTN is credited to Lagos State. 

Proposed Tax Reforms: VAT credited to where product and services are consumed. For instance for every MTN services - calls or data, VATs would be credited to the location of the consumer rather than the head office of the products and services.

Review of the present tax arrangement based on VAT Distribution in 3 States and FCT

On the 18/11/2024, the FIRS chairman made the remarks watch the video below:

“... The VAT sharing for the month of October which I just signed on Friday November 15th, 2024:

• Lagos will take 42% of the VAT. 
• Rivers will take 16%. 
• Oyo State will take 5.2%, 
• FCT will take 9%. 

If you take those 3 States and FCT, they are taking more than 70% of the tax.  

“Why? Because those are the places where the head offices of those places are located. 

And we know that 70% of consumption is not happening in those three states and FCT alone.

Concerns: There are concerns about the fairness of this distribution and its impact on other states.

Proposed Changes: The Tax Reform Bill aims to address these concerns by restructuring the VAT distribution to ensure a more equitable allocation among all states.

Source:

Tax reform bill: 3 states and FCT get above 70% of all VAT under current tax law - Zacch Adedeji: