Committee to submit tax reforms report to Senate next week

…says recommendation won’t be far from govs’ requests

The Special

The Nigerian Senate will be receiving tax reforms report from the Special Committee constituted for the purpose by the Senate next week, Abba Moro, the Chairman of Senate Special Committee, has said.

The Committee, set up to liaise with Lateef Fagbemi, Minister of Justice and Attorney General of the Federation, was tasked with reviewing various aspects of the proposed tax laws and addressing concerns from key stakeholders, including State governors and revenue collection Agencies.

Speaking exclusively to BusinessDay, Moro explained that the Committee’s recommendations would take a holistic approach, particularly focusing on contentious issues such as Value Added Tax (VAT) derivation, revenue sharing, and the role of States and Local Governments in tax administration.

He said, “The Committee is currently completing its reports and will submit the report to the Senate next week.”

The tax reform process, a crucial component of the Federal Government’s economic agenda, has sparked off debates among different levels of Government.

One of the major points of contention is VAT collection and sharing.

While the Federal Government currently controls VAT collection and distributes revenue based on a formula, some State governors particularly from the North rejected the bills.

Read also: Will the governors deliver the Tax Reforms Nigerians truly need?

However, in January, the governors shifted their stance and endorsed the tax reform bills submitted by President Bola Tinubu to the National Assembly.

This was made known in a Communiqué issued after a meeting with Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, in Abuja.

In the Communiqué signed by Governor Abdulrahman Abdulrazaq of Kwara State and Chairman of the Nigeria Governors’ Forum (NGF), the Forum proposed an equitable sharing formula for VAT.

The governors recommended that the revised VAT sharing formula should allocate 50% based on equality, 30% based on derivation, and 20% based on population.

“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population,” the Communiqué stated in part.

When asked if the Senate would adopt the governors’ recommendation in passing the bill, Moro stated that “the Committee is considering all perspectives holistically to ensure broad-based recommendations.”

Moro revealed that beyond VAT derivation, the Committee would also be addressing concerns raised by other stakeholders, including business groups and economic experts.

He noted that some of the proposals might differ from the Federal Government’s position, but the Committee would be working to synthesise all perspectives into a workable legislative instrument.

“There are critical stakeholders who have come up with positions that are at variance with the federal government’s stance. We are ensuring that all perspectives are synthesized into a workable legislative instrument”, he noted.

Additionally, the Committee is reviewing how revenue-collecting agencies operate, particularly those under state and local governments, to minimise conflicts. Resolving these disputes is expected to facilitate smoother tax implementation and reduce friction between the federal and sub-national governments.

“You know that there are certain aspects of the tax bill that touch on revenue collection agencies, some of which are state governments. Some of which are also local governments. And so we are recommending the resolution of those areas so that there will be less rancor over the tax bill, there will be fewer conflicts,” Moro explained.

Regarding the timeline for a public hearing on the tax reform bill, Moro stated that while no specific date had been fixed, the Senate Finance Committee had been given six weeks to submit its report.

“If they need more time, they will request an extension, but so far, they have not done so. This means they are still working within the Senate’s directive, and we expect that by the end of six weeks, there should be significant progress,” he added.

Once the Special Committee submits its report, its findings will serve as a guide for the Senate Finance Committee in refining the tax reform bill before its final consideration by the Senate.

“The goal is to produce a document that Nigerians will accept—one that balances federal interests with the realities of states and local governments,” Moro concluded.