Tax Reforms: Oyedele Responds to Northern Governors’ Concerns on VAT Distribution

The Chairman of Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has addressed concerns raised by the Northern Governors’ Forum over the proposed Value Added Tax (VAT) amendments within the Nigeria Tax Reform Bill. The bill, submitted recently to the National Assembly by President Bola Ahmed Tinubu, seeks to adjust the distribution model of VAT to a derivation-based system aimed at promoting equity.

The governors of the 19 Northern states have voiced opposition, particularly toward this new derivation-based VAT model. Speaking on behalf of the Forum, Governor Inuwa Yahaya, Chairman of the Northern Governors’ Forum, stated that the current VAT remittance structure uses the location of a company’s headquarters and tax office, rather than the place where goods and services are actually consumed. “In view of this,” Yahaya noted, “the forum unanimously rejects the proposed tax amendments and calls on the National Assembly to stand against any bill that could endanger the welfare of our people.”

In response, Oyedele explained that the committee’s intention is to establish a fairer distribution system. “We understand the concerns expressed by the Northern governors about the inequities in the current VAT derivation model,” Oyedele stated. “This model affects states across Nigeria because VAT revenue is based on remittance location, rather than where goods or services are supplied or consumed.”

The committee’s proposal, according to Oyedele, would modify the system to consider supply or consumption origins of goods and services, including zero-rated, exempt, and standard-rated products. He added, “For instance, a state that produces food shouldn’t lose revenue simply because its products are VAT-exempt or consumed elsewhere. Recognizing the state of supply is essential. The same applies to telecommunications; VAT distribution should reflect where subscribers are based.”

In a related response, Senator Ali Ndume, representing Borno South, urged the federal government to avoid imposing additional taxes on Nigerians, instead recommending a focus on high-net-worth individuals and corporations. Ndume expressed concern over the economic strain on middle-class Nigerians, explaining, “Nigeria’s middle class is nearly disappearing. If Nigerians can bear the taxes, that’s acceptable, but in the current situation, raising taxes is not an option. We need to prioritize stability and quality of life over survival.”

He further highlighted that the North faces higher poverty levels and any tax increase should be targeted toward those who can afford it. “Those with the ability to pay are often not the ones paying,” he added.