Tax Reforms Seek Fairer VAT Distribution as MTN Pays Over N200bn Monthly

The chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has unveiled critical flaws in Nigeria’s Value Added Tax (VAT) allocation system, sparking a renewed call for equitable reforms.

Speaking at a recent interview on Tax Reforms, Oyedele emphasized the urgency of addressing disparities that favor certain states to the detriment of others.

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In his remarks, Oyedele revealed that MTN Nigeria, the country’s largest telecom operator, pays over N200 billion in VAT monthly. However, all the revenue from MTN’s VAT contributions is currently allocated solely to Lagos State, where the company’s headquarters is located, despite services being consumed nationwide.

“MTN is the largest contributor to VAT in Nigeria. So they, in fact, pay VAT of over N200bn every month; the gap between them and number two is huge,” Oyedele stated. “Today, all the VAT paid by MTN is credited and attributed to Lagos State, even as calls are made in Kano, the FCT, Ekiti, Edo, or Kebbi.”

To correct these imbalances, the tax reform committee has proposed adjustments that will allocate VAT revenues based on consumption rather than the location of corporate headquarters. Oyedele illustrated how this redistribution would reduce Lagos State’s current share to about 20 percent, allowing other states to benefit fairly.

“This adjustment ensures that states where the VAT is generated get their fair share,” he explained. “When you analyze the data, you see Lagos State’s share reduces slightly, but every other state gains.”

The proposal, part of a broader tax reform bill, aims to address inefficiencies and foster fairness in Nigeria’s fiscal policies. By redistributing VAT revenues based on actual consumption, the reforms are expected to enhance state-level development and balance the economic advantages enjoyed by specific regions.

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Despite the potential benefits, the proposed changes have sparked debates, with critics accusing the committee of pursuing policies that could harm certain interests. Oyedele dismissed such claims, arguing that maintaining the status quo perpetuates inequality.

“If you’re doing the wrong thing, how can Lagos State disagree with us when we propose to fix it?”

he queried.

The reform bill also includes provisions for tackling inefficiencies and boosting revenue transparency, aligning with the government’s broader goal of creating a more inclusive economic environment.

Oyedele’s revelations and the proposed VAT reforms signal a shift toward equitable fiscal policies, promising a fairer distribution of resources to support nationwide growth.