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How Proposed Tax Reforms Will Address Current Imbalance – FIRS Chair, Zacch Adedeji

Published

1 year ago

November 19, 2024

Editor

The FIRS Chairman explained that the current VAT sharing arrangement primarily benefits Lagos, the FCT, and Rivers—states where most corporate head offices are located.

He further noted that the proposed reforms aim to address this imbalance by introducing a derivation principle model, ensuring a more equitable distribution of VAT revenues to all states, regardless of their economic status.

Today, I just reeled out of the data on this month of October sharing. I just signed it in on Friday. Today, Lagos will take 42% of the VAT. Rivers will take 16%. Oyo State will take 5.2%, FCT will take 9%. If you take those 3 States, they are taking more than 70% of the tax.

“Why? Because those are the places where the head offices of those places are. And we know that 70% of consumption is not happening in those three states.

So in whatever way you look at it, there is no way every other state apart from Lagos, Rivers, FCT, benefits from the proposed tax bill.

“If you look at it, MTN contributed highest, but because MTN headquarters is in Lagos, all the allocation from MTN is being accrued to Lagos. So, when this bill is passed, all states will benefit irrespective of the kind of economic situation that is happening in Nigeria,” Adedeji said.

Derivation Principle for Consumption Tax

In addition, the FIRS Chairman clarified that the derivation principle model applies specifically to consumption tax or Value Added Tax (VAT).

In his address, Adedeji emphasized that this model should not be mistaken for the derivation principle applied to oil-producing states, which is based on the location of production.

He explained that, in the case of consumption tax, derivation means the funds will be allocated to the states where the commodity is consumed, rather than the states where corporate head offices are situated.

“On derivation, I see there is a mix-up here. We have the oil and gas. If you look at the oil and gas, where they produce is where we sell and collect money from the oil. That’s why it is limited to their States.

“VAT by definition is a consumption tax. If you use derivation in VAT, what it means is that where is it consumed. Where do you make the call? Where is the bank transaction done? What the bill seeks to correct is that the existing structure we have does not represent the intent of Nigeria,” Adedeji added.

What you should know

The new tax bills under consideration in the National Assembly propose adopting a derivation principle in the allocation of VAT revenues between the federal government and sub-national entities.

These proposals have sparked controversy, with northern elites openly rejecting them, arguing that the changes may not favor their region.

Under the current Section 40 of the VAT Act, VAT revenue is allocated as follows: 15% to the Federal Government, 50% to the States and Federal Capital Territory (FCT), and 35% to Local Governments. The allocation to states and local governments incorporates a derivation principle of at least 20%.

Although not explicitly detailed in the VAT Act, other factors influencing the distribution include 50% based on equality and 30% based on population.

Additionally, 4% of collections are allocated to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% goes to the Nigeria Customs Service (NCS) for import VAT.

Related Topics:Dr Zacch Adedeji featured FIRS

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Rivers Assembly Suspends Impeachment Move Against Fubara After Tinubu’s Intervention

Published

5 hours ago

February 19, 2026

Editor

The Rivers State House of Assembly has officially suspended impeachment proceedings against Governor Siminalayi Fubara and his deputy, Ngozi Odu, following President Bola Tinubu’s intervention.

The House moved the motion to halt the impeachment process on Thursday at its resumed sitting in Port Harcourt, the state capital.

JomogNews had reported that during its first sitting of 2026, the House had begun impeachment proceedings against the governor and his deputy over allegations of gross misconduct, including the demolition of the State Assembly complex and alleged spending without legislative approval, among other claims.

More details later….

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Reserves Surge To $48.5bn As Nigeria Reclaims 2013 Peak Levels

Published

6 hours ago

February 19, 2026

Editor

Nigeria’s foreign exchange (FX) reserves have reached $48.5 billion, their highest level in nearly 13 years.

This milestone, confirmed by data from the Central Bank of Nigeria (CBN), surpasses previous multi-year peaks and represents the strongest balance since May 14, 2013, when reserves stood at approximately $48.51 billion.

However, the data showed that the foreign reserves increased steadily by 6.45 percent or $2.94 billion year-to-date, from $45.56 billion reported on January 1 to $48.5 billion.

Further checks showed that the FX reserves figure was $48.36 billion on Monday.

According to the CBN, FX reserves are assets held on reserve by a monetary authority in foreign currencies, which are used to back liabilities and influence monetary policy.

On December 22, 2025, the apex bank projected that the country’s external reserves would rise to $51.04 billion in 2026, saying the increase will be supported by FX reforms.

“Reforms in the foreign exchange market are expected to sustain exchange rate stability, while external reserves are projected to increase to US$51.04 billion,” CBN said.

On February 10, Olayemi Cardoso, governor of CBN, said the bank will do “whatever it takes” to safeguard the value of the naira, while strengthening the country’s external reserves.

Looking ahead to 2030, he said the CBN’s targets include achieving single-digit inflation and growing foreign exchange (FX) reserves driven by non-oil exports, foreign direct investment, and diaspora remittances.

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Ogun Police Launch Investigation Into TikToker Mirabel’s Sexual Assault Claims

Published

7 hours ago

February 19, 2026

Editor

The Ogun State Police Command has launched an investigation into sexual assault allegations made by a TikToker known as Mirabel (@mirab351), who is currently receiving treatment in an Intensive Care Unit (ICU).

The case gained widespread attention after she posted emotional videos on Monday, February 16, detailing an attack she claimed occurred at her home the previous Sunday.

The command’s Public Relations Officer, Oluseyi Babaseyi, disclosed the development on Thursday while speaking on The Morning Brief.

Babaseyi confirmed that Mirabel voluntarily visited the Ibafo Police Division on Tuesday, February 17, to lodge a formal complaint and was subsequently admitted to the hospital for medical care due to her unstable condition.

“When the DPO in Ibafo met with her, she was taken to the hospital for medical analysis. She wasn’t as stable as necessary, but we ensured the investigation continued.

“As we speak, she is in the intensive care unit getting appropriate care. Her medical well-being is more important to us at this point. When she is stable, we can now continue investigations and get the necessary facts,” Babaseyi said.

According to Babaseyi, the incident reportedly occurred in Ogijo, a border community between Ogun and Lagos states.

The police have established that Mirabel was not arrested, but rather, she is being treated as a victim.

The command urges individuals with useful information to come forward and assist with the investigation.

“She was not arrested by the police. She reported a case, and we are investigating. Nothing like her arrest happened,” he said.

“If the allegation is established to be true, the perpetrator will be arrested and charged to court appropriately. Otherwise, the law also addresses giving false information,” the police stated.

The police said they will rely on evidence to reach a logical conclusion and take appropriate action.

“We advise people not to jump to conclusions based on emotions. We are investigating and will rely on evidence to reach a logical conclusion,” Babaseyi said.