Senate Committee Recommends Retaining 7.5% VAT In Tax Reform Bills.
In a significant development for Nigeria’s fiscal policy, the Senate Committee on Finance has recommended retaining the current 7.5% Value Added Tax (VAT) rate as part of ongoing deliberations on the Tax Reform Bills. The decision, announced on Tuesday, is seen as a balanced approach to maintaining economic stability while addressing revenue distribution concerns.
The committee also outlined a new VAT sharing formula to ensure equitable distribution across the federation. According to the proposed structure, 50% of VAT revenue will be distributed equally among all states, 20% will be allocated based on population size, and 30% will be shared according to consumption levels. This formula aims to promote fairness and support regions with varying economic profiles.
In addition, the Senate has approved continued funding for key institutions, including the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA). This move underscores the government’s commitment to advancing education, technological innovation, and infrastructure development.
Speaking on the recommendations, a spokesperson for the Senate Committee on Finance described the decisions as “a step towards fostering inclusive growth and sustainable development.” The retention of the 7.5% VAT rate is expected to provide certainty for businesses and consumers while supporting the government’s revenue goals.
The proposed VAT sharing formula and funding provisions will now proceed to further legislative scrutiny before final adoption. Stakeholders have welcomed the clarity provided by the committee’s recommendations, with many expressing optimism about their potential to drive economic progress across Nigeria.
As the Tax Reform Bills move through the legislative process, all eyes will be on the Senate’s efforts to balance fiscal responsibility with the needs of a diverse nation.