New VAT model unfavourable to Lagos, Rivers

Lagos and Rivers are two states that will witness an unfavourable change in the advent of the proposed value-added tax (VAT) derivation.

This is according to the VAT Consumption Data by the National Bureau of Statistics (NBS).
Under the current model, Lagos gets 80.26% but the new model will see -81% change, resulting in a derivation of 15.28%.

For Rivers, the state currently enjoys a derivation of 7.74% which will become 4.60%, signalling -41% change.
Abia State, which is at the bottom in the least ranking states, will experience a significant change at 3,469%, with the old derivation of 0.05% witnessing an increase to 1.68%.

Imo State will move from 0.05% to 2.84% increase if the new model contained in the Tax Reform Bills of President Bola Tinubu is adopted and passed into law by the Senate.

Meanwhile, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said the proposed Tax Reform Bill will be a win-win for all the tiers of government.

In a post on X, Oyedele lamented that the current derivation is mainly determined based on where VAT is remitted, rather than where goods or services are supplied or consumed.

He said the new proposal aims to create a fairer system by devising a different form of derivation which takes into account the place of supply or consumption for relevant goods and services whether they are zero-rated, exempt or taxable at the standard rate.