The Federal Inland Revenue Service (FIRS) has backed some National Assembly members opposing the current Value-Added Tax (VAT) sharing formula in Nigeria.
- The agency highlighted that approximately 34 states are disadvantaged compared to Lagos, Rivers, and Abuja.
- Dr. Zacch Adedeji, chairman of FIRS, expressed dissatisfaction that Lagos, Rivers, and the Federal Capital Territory receive 70 percent of VAT proceeds, calling it unfair to the remaining states. This statement was made during an interactive session with House of Representatives members regarding proposed tax reform bills.
- Adedeji revealed that he signed off 42% of October VAT proceeds to Lagos State last Friday.
- He aligned with northern lawmakers’ concerns, suggesting the sharing formula poses risks for their states amid proposed tax reforms.
- Adedeji argued that the current VAT distribution framework does not serve Nigeria’s best interests.
- He pointed out that Lagos (42%), Rivers (16%), Oyo (5.2%), and the FCT (10%) collectively take over 70% of VAT proceeds, largely due to the location of many revenue-generating companies’ head offices in these regions.
- He emphasized that 70 percent of Nigerians who consume products and services from these companies are distributed across the country.
