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The tax reform effort of the current administration which seeks to reform Nigeria’s tax collection and administration systems. This reform consists of 4 different bills. However, the Nigeria Tax Administration Bill has sparked intense debates across various regions of the country.

Nigeria Tax Administration Bill seeks to rejig the structure of VAT distribution across the 36 states and the Federal Capital Territory. The proposed formula, distributes revenue as follows:

  • 10% to the Federal Government
  • 55% to State Governments and the Federal Capital Territory (FCT)
  • 35% to Local Governments

 Additionally, the bill mandates that 60% of the revenue credited to the states (55% of the total VAT collected) and local governments will be distributed based on derivation (35% of the total VAT collected).

Southern states, advocate for greater control over locally generated VAT, highlighting their economic contributions. Meanwhile, northern states, oppose this shift, fearing the loss of federal allocations that sustain their economies.

According to Mr Taiwo Oyedele (Chairman, Presidential Fiscal Policy and Tax Reforms Committee), the tax reform bill is primarily aimed at driving productivity across all states in Nigeria. The intention is not to stifle growth in any particular region but to create a system where states are incentivised to increase their economic output and revenue generation.

However, to address the concerns of states that are opposed to the reform, there needs to be extensive consultation with thought leaders, policy makers, and citizens. A clear understanding of the benefits and rationale behind the tax reform will be crucial in alleviating fears and fostering wider acceptance.

The complexity of Nigeria’s tax reforms calls for a data-driven approach to ensure fairness. VIISAUS with its expertise in data-driven strategies, is positioned to provide the insights needed to develop solutions that align with Nigeria’s economic realities, ensuring sustainable growth across all regions.

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