By Awwal Umar In a recent Facebook post, Muhammad Nami, former Chairman of the Federal Inland Revenue Service (FIRS) and renowned tax expert...
By Awwal Umar
In a recent Facebook post, Muhammad Nami, former Chairman of the Federal Inland Revenue Service (FIRS) and renowned tax expert, addressed the ongoing debates surrounding the proposed Nigeria Tax Administration and VAT Reform Bills.
Nami stressed the importance of a balanced and inclusive approach to the reforms, which have drawn mixed reactions from stakeholders. While some view the bills as transformative for Nigeria’s fiscal landscape, others, including the Northern Governors Forum and the National Economic Council, have voiced concerns about their potential implications, calling for broader consultations.
Explaining key concepts such as "derivation" and "attribution," Nami highlighted how the proposed reforms aim to address inequities in the current VAT distribution system. Presently, VAT revenue is often allocated based on the location of company headquarters, favoring states like Lagos, Rivers, and the Federal Capital Territory (FCT). The new framework seeks to distribute VAT revenue based on the place of consumption, ensuring that states where goods and services are consumed receive a more equitable share of the revenue.
Nami outlined the anticipated benefits of these reforms, including:
- Enhanced transparency in tax collection and distribution.
- Increased revenue generation for states, particularly those historically disadvantaged under the current system.
- Promotion of financial inclusion and economic equity across Nigeria.
However, Nami cautioned against rushing the reforms, advocating for a phased implementation over three to five years. He emphasized the need to address challenges such as the development of technological infrastructure, fiscalization measures, and capacity building within the FIRS to ensure a smooth transition.
Appealing to the National Assembly and other stakeholders, Nami urged a thorough evaluation of the reforms, weighing their benefits against potential challenges and fostering collaboration to find workable solutions.
Drawing on his experience as FIRS Chairman and President of the Commonwealth Association of Tax Administrators (CATA), Nami reiterated his support for the reforms, provided they are implemented gradually to ensure fairness and preparedness across all states.
Nami’s call for dialogue and phased implementation underscores the complexity of VAT reforms and their significance in Nigeria’s quest for fiscal equity and sustainability.
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