The Chairman of the Presidential Fiscal Coverage and Tax Reforms Committee, Taiwo Oyedele, has disclosed that MTN Nigeria contributes over N200 billion in Worth Added Tax month-to-month, making it the biggest contributor to the nation’s VAT pool.
Oyedele made the disclosure just lately whereas talking as a panellist throughout Channels Tv’s City Corridor on Tax Reforms.
He used the platform to focus on disparities within the present VAT distribution system and defined the reforms geared toward addressing them.
Based on the tax knowledgeable, the present system allocates all VAT paid by the nation’s largest telco to Lagos State, the place the corporate’s headquarters is positioned, though the companies that generate this income are consumed nationwide.
“MTN is the biggest contributor to VAT in Nigeria. So that they, in actual fact, pay VAT of over N200bn each month; the hole between them and quantity two is big.”
He added, “Right now, all of the VAT paid by MTN is credited and attributed to Lagos State, whilst calls are made in Kano, the FCT, Ekiti, Edo, or Kebbi.”
A part of the reform invoice proposes changes to make sure a extra equitable distribution of VAT revenues throughout states primarily based on precise consumption slightly than the situation of company headquarters.
To show the implications of the proposed reforms, Oyedele supplied a hypothetical redistribution mannequin of MTN’s VAT contributions.
He illustrated how the reforms would allocate the VAT income primarily based on consumption slightly than the situation of the corporate’s headquarters.
Beneath this new framework, Lagos State, which at present retains the total N200bn, would see its share decreased to roughly 20 per cent, whereas different states throughout the federation would profit from a fairer distribution.
“This adjustment ensures that states the place the VAT is generated get their justifiable share,” Oyedele stated.
“Once you analyse the information, you see Lagos State’s share reduces barely, however each different state positive aspects.”
The tax reform invoice, which goals to deal with longstanding points in Nigeria’s fiscal insurance policies, contains provisions for income redistribution, addressing inefficiencies, and selling equity within the tax system.
The reform proposal has sparked debates just lately, with some critics accusing the committee of pushing insurance policies that might adversely have an effect on some events.
Oyedele dismissed these claims, emphasising that the present system is flawed and unfair. “In case you’re doing the improper factor, how can Lagos State disagree with us once we suggest to repair it?” he argued.