FG signals willingness to compromise on VAT structure amid tax reform debates

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has announced that the Federal Government, under the leadership of President Bola Ahmed Tinubu, is prepared to make concessions on the contentious Value Added Tax (VAT) structure included in the tax reform bills currently before the National Assembly.

Oyedele made this statement during an interview on Channels Television on Sunday, addressing ongoing debates surrounding the proposed reforms.

The four bills—the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill—aim to revamp the nation’s tax framework but have sparked significant controversy since their introduction in October 2024.

Central to the debates is the proposal to shift from the current Attribution Principle of VAT distribution to a Derivative Principle.

The latter would allocate VAT revenues based on consumption patterns, a move proponents argue would promote equity and efficiency across all regions.

However, critics have raised concerns about its potential implications, particularly for states with lower consumption levels.

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Oyedele emphasized that the proposed VAT structure would ultimately benefit every part of Nigeria, dispelling fears that certain regions might be disadvantaged.

Nonetheless, he stated the committee’s readiness to revert to the existing formula if that is the consensus.

“We are open to discussions and willing to make adjustments where necessary,” Oyedele said.

“If the preference is for the current VAT formula, we will maintain it 100 percent. What is non-negotiable is the need for reforms that will move Nigeria forward.”

He also criticized those opposing the reforms for misrepresenting the committee’s intentions. “The problem we are trying to solve should not be used against us. Our focus is on creating a fair and sustainable tax system for all Nigerians,” he added.

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The proposed reforms are seen as a critical step in addressing inefficiencies within Nigeria’s tax system, improving revenue generation, and ensuring fiscal sustainability.

Stakeholders across the political and economic spectrum are urged to engage constructively as the bills progress through the National Assembly.

The Federal Government’s willingness to compromise signals an effort to build consensus and move forward with the long-overdue overhaul of the tax system.

However, the road to achieving a balanced and widely accepted reform remains fraught with challenges.