As shared by Sunday Dare, newly appointed Spox to President Asiwaju Bola Ahmed Tinubu: “Taiwo Oyedele, Chairman Presidential Committee on Fiscal Policy and Tax Reform here provides an invaluable insight.
” … Rivers state, Lagos state have been to court and they have won. If we get a judgement from the Supreme Court today to tell you that VAT should be collected and administered by state, that will be chaotic. It will take us back to 1986, business will suffer it and the economy will retrogress, we don’t want that.
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All the banks , almost all of them have headquarters in Lagos and they pay the VAT in Lagos, beverage companies, Nigerian breweries, Coca Cola they sell across Nigeria but they file in Lagos, currently, that VAT that is remitted in Lagos is being attributed to Lagos as being derived from Lagos but it’s not derived from Lagos, when you make calls it’s derived from across Nigeria which was why we thought that the next conversation we will have with Lagos is to move from where VAT is remitted to where the consumption takes place.
Every state in Nigeria use mobile phones, they use airtime, they buy drinks, they buy cements but Dangote will remit VAT in Lagos. So we said let’s correct this distorted derivation and reflect economic activities everywhere those activities take place with purpose of sharing
In the 90s, companies were filing returns everywhere then in 2024 we say file it in one place that’s what we’ve done for some years. Mtn can tell you where their subscribers are based, as a company you have distributors and they have addresses in five minutes they can tell you where their distributors are based and how much goods they’ve sent to them. Rather than saying the company producing the beverages has it headquarters in Lagos and that’s where we derive all of them from in Nigeria we send them to Ekiti, Zamfara, kebbi etc let them take credit for their economic activities and I think everyone should be happy about it except Lagos.
Honestly, it’s only Lagos state that should not like what we are proposing.
Rivers has mostly the oil companies, the story about rivers is that what the oil company sells is VAT exempt so they don’t have a lot of VAT in that sense that is attributed to them apart from the fact that the oil companies receive invoices by law they are meant to retain the VAT, that’s what they are remitting.
On balance, this was meant to treat everybody equitablely, trying to get us out of the impression that when you start doing VAT at state level you make so much money which is not the case.
Infact today; the VAT on import and international services is actually more than the VAT we collect in Nigeria within our jurisdiction and that amount that’s collected from international services is not attributed to any state, it goes into the pool and it’s shared.
So we share today VAT between and among states based on derivation 20%, based on equity 50% based on population 30%
We are proposing that correct the derivation and share 60% based on derivation, 20% based on population and 20% based on equality.
The most attractive proposition we have is FG shields 5% of their share to states instead of taking 15% now we have 5% that can give us a buffer that we can use to do fiscal equalization and actually write in the law to guarantee every states that as a result of our reform you will not collected less than you would have collected under the old formula.
It’s actually just saying to you as a state that your risk is zero but the upside is significant, your VAT revenue can double in less than 2 years if you allow this reform to go through because it would also motivate states to take interest in the economic activities within their jurisdictions.
I will say we are making progress, I do think that the misunderstanding was based on people not reading all the provisions of the law because we are just trying to correct how this derivation is done and it is in the tax administration bill whereas the VAT law is in the Nigerian tax bill… “Mr. Taiwo Oyedele. Credit Channels TV.”
Taiwo Oyedele, Chairman Presidential Committee on Fiscal Policy and Tax Reform here provides an invaluable insight.
” … Rivers state, Lagos state have been to court and they have won. If we get a judgement from the Supreme Court today to tell you that VAT should be collected…— Sunday Dare,CON (@SundayDareSD) November 24, 2024
