Reconsider 60% VAT sharing formula to states in tax reform bill, KADCCIMA tell FG
Omeiza Bilal
The Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA) has called on President Bola Tinubu reconsider the sharing formula for Value Added Tax (VAT) in the proposed Tax bills before the National Assembly.
In a statement signed by its President/ Chairman of Council Esv. Ishaya Idi, KADCCIMA stated that the bill if it is passed into law would come with serious operational challenges during implementation.
According to the KADCCIMA President, the major issue in the bill is the proposed 60% of the VAT received that will go to the state of collection.
“A situation whereby the proposed amendments state that revenue generated from Value Added Tax (VAT) will be shared on the derivation-based model and will definitely put a number of regions at a disadvantaged position. This is because companies compute and remit VAT using the location of their headquarters and tax office and not where services and goods are consumed.
“What this means is that some states will be shortchanged because major companies will pay their VAT to Lagos state, where their headquarters are instead of the states where they have their operations or location where the service and or product are consumed.
It should be to note that VAT is consumption tax which should be paid at the point of consumption and not the point of production. It is against this background that we wish to appeal to the President Federal Republic of Nigeria to reconsider this bill because of its serious implications (economic, social, and political),” the Chamber said.
KADCCIMA urged the federal government to use the tax reform to include proper attribution of tax to areas of collection before derivation
“For fairness and justice, the president should conduct public hearing in all the 6 geo-Political zones. Doing these will help in no small measure in coming up with an agreeable formula and pattern on the model that will be fair, equitable, and acceptable to all,” it added.
