Type: Legislation
Nigeria’s proposed Tax Reform Bill, submitted to the National Assembly, aims to revise the allocation of VAT revenue among the country’s 36 states by shifting from a production-based model to a consumption-based formula. The reform addresses inequities in VAT distribution, benefiting populous but underdeveloped states by focusing on the location of goods and services consumption. Currently, states like Lagos and Rivers dominate VAT revenue allocations, while others like Borno and Bauchi receive minimal shares. The reallocation is expected to reduce regional disparities and support critical public investments in healthcare, education, and infrastructure, though wealthier states may face initial fiscal pressures. This reform aligns with President Tinubu’s Renewed Hope Agenda, promoting inclusive growth and regional equity across Nigeria.
Effective date: Pending approval by the National Assembly.
