The presidency has responded to concerns raised by the Northern Governors’ Forum regarding the proposed tax reform bills before the National Assembly.
They are the Nigeria Tax Bill, Nigeria Tax Administration Bill (NTAB), Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board Establishment Bill.
Bayo Onanuga, President Bola Tinubu’s Special Adviser on Information and Strategy, explained that reforms in the proposed bills are not designed to put the North at a disadvantage but create a fairer and more efficient tax system for all Nigerians.
“On the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.
“The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue,” Onanuga clarified.
The forum, comprising governors from 19 northern states, had rejected the new derivation-based model for Value-Added Tax (VAT) distribution on the grounds that it undermines the region’s interests.
“Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the bill are against the interests of the north and other sub-nationals especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model. This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of National Assembly to oppose any bill that can jeopardise the well-being of our people,” the Forum had said in a communique signed by its Chairman and Governor of Gombe state, Muhammed Inuwa Yahaya.
But Onanuga explained that the tax reform bills mainly seek to streamline the country’s tax system and eliminate redundancies.
According to him, the executive bills will consolidate multiple taxes, simplify tax obligations for individuals and businesses, and improve coordination among federal, state, and local tax authorities.
“First is the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
“Second, the Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country.
“Third, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.
“Fourth, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities,” he said.
Onanuga added that the fourth bill also proposed the establishment of the Office of Tax Ombudsman under the Joint Revenue Board to serve as a complaint resolution body for taxpayers.
“It is instructive to note that these proposed laws will not increase the number of taxes currently in operation. Instead, they are designed to optimise and simplify existing tax frameworks.
“The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.
“The reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.
“Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.
“The proposed reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation,” the presidency further explained.
A few days ago, the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, acknowledged the northern governors’ concerns but insisted that the proposed bills aim to create a fairer system that respects the individual differences among states.
“We share the sentiment expressed by the Northern Governors regarding the inequity inherent in the current model of derivation as a basis for distributing VAT revenue. This issue, in fact, affects many states across all geopolitical zones because the current derivation is mainly determined based on where VAT is remitted, rather than where goods or services are supplied or consumed.
“Our proposal aims to create a fairer system by devising a different form of derivation which considers the place of supply or consumption for relevant goods and services, whether they are zero-rated, exempt, or taxable at the standard rate,” Oyedele had said in a post on X on Tuesday.