The governors, at the end of their meeting, endorsed the sharing of the VAT proceeds on the basis of 50 per cent equality, unchanged from what is currently in operation; 30 per cent derivation, from 20 per cent currently in operation and 60 per cent that was proposed by the Presidential Tax Reform Committee headed by Mr. Taiwo Oyedele.

The governors also agreed on 20 per cent sharing on population basis, from 30 per cent which is the current allocation before the tax reforms proposal.

The tax reforms deal came as Senate yesterday projected a N100 trillion aggregate expenditure for the 2026 fiscal year, and vowed to free funds it said were being held by some government organisations.

Senator Solomon Adeola, chairman, Senate Committee on Appropriation, made the disclosure during a Stakeholders Public Hearing and Interactive Session on the 2025 Appropriation Bill. The session had the theme, “The 2025 Budget of Restoration: Securing Peace, Rebuilding Prosperity.”

Senator Natasha Akpoti-Uduaghan, the chairman of the Senate Committee on Local Content, said some stakeholders in the north were jittery about the tax reform bills because the region was ill-prepared for such fiscal legislation.

At the same time, some northern groups urged Nigerians, particularly northerners, to be wary of political actors using the current tax reforms debate as platform to advance their ambitions ahead of the 2027 general election.

However, Academic Staff Union of Universities (ASUU) reiterated its stance against the proposed Nigeria Tax Bill 2024, warning that it would spell doom for public universities in the country if implemented.

The communique of the governors’ meeting with members of the Presidential Tax Reform Committee in Abuja, held behind closed-doors, was signed by Abdul Rahman Abdul Razaq, chairman of Nigeria Governors’ Forum (NGF) and Governor of Kwara State.

The communique stated, “The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, arrived at more resolutions.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.

“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills

“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reforms Bills.”

Yesterday’s meeting between the governors and members of the presidential committee marked a major breakthrough, as the northern states’ governors, emirs and chiefs had last year rejected the proposed tax amendment bills sent to the National Assembly by the federal government.

They said it was capable of jeopardising the wellbeing of the people in the region.

The northern leaders said they were not against any policy that would ensure the growth and development of the country, but called for equity and farness in the implementation of all national policies and programmes to ensure that no geopolitical zone was marginalised.

Their position was contained in a communique signed by Chairman of Northern Governors’ Forum, Governor Muhammadu Yahaya of Gombe State, after a joint meeting with the traditional council in Kaduna.

The communique read, “Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly.

“The contents blare 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 call on members of National Assembly to oppose any bill that can jeopardise the well-being of our people.

“For the avoidance of doubt, the Northern Governor’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country.

“However, the Forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised.”

According to the Tax Umpire, the dates are; 10th of May,2024, Due date for remitting Pay As You Earn (PAYE), 21st of May,2024, Due date for Value Added Tax (VAT) and Withholding Tax (WHT) return respectively.

According to investopedia, Pay As You Earn (PAYE), refers to either a system of income tax withholding by employers or income-based system for student loan repayments.

In the context of taxes, Pay As You Earn, requires employers to deduct income tax-and in some cases the employee portion of social insurance benefit taxes form each paycheck delivered to employees as form of advance payment on tax due.

Meanwhile, the standard VAT rate is 7.5% (increased from 5% on 1 February 2020) and  Zero-rated items include goods and services purchased by diplomats and goods purchased for use in humanitarian donor-funded projects.

Exempt items include plants and machinery for use in export processing zones (EPZs) or free trade zones (FTZs), basic food items (based on a specific list), medical products and services, pharmaceutical products, books and educational materials, and exported services.

In Nigeria, Companies such as; MTN, Airtel, government agencies, banks, and oil and gas companies are required to deduct at source VAT charged by their suppliers and remit it to the tax authority.

All other organizations are required to collect VAT charged on their invoices from their customers for filing and payment to the tax authority.

The Finance Act 2019, has introduced a reverse-charge mechanism for services from which no tax invoice was received. VAT returns are filed on a cash basis.

The FIRS has implemented a platform for auto tracking and remittance of VAT known as FIRS VAT-Collect. Some of the users of the system are domestic airlines (for instant remittance of VAT on their ticket sales) and other retailers.

Non-resident digital companies (as appointed by the tax authorities) rendering services to Nigerian customers are required to charge, collect VAT, and remit to the FIRS in the currency of transaction.

FIRS, also noted that 31st of May, 2024, is the Due date for companies income Tax (CIT),  for October 2023 accounting year end, Tertiary Education Tax (TET) & National  information Technology Development Levy (NITDL).

In Nigeria, the CIT rate is 30% for large companies (i.e. companies with gross turnover greater than 100 million Nigerian naira [NGN]), assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).

Investment income paid by a Nigerian resident to a non-resident is sourced in Nigeria and subject to withholding tax (WHT) at source, which serves as the final tax.

In respect of business profits, a non-resident company (which is not tax resident in a treaty country) that has a fixed base or a permanent establishment (PE), in Nigeria is taxable on the profits attributable to that fixed base. Non-resident digital companies (which are not tax resident in a treaty country) that have a significant economic presence (SEP) will be subject to income tax in Nigeria on profit attributable to the taxable presence in Nigeria.

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