NewStats: 3,262,528 , 8,177,381 topics. Date: Monday, 02 June 2025 at 02:54 PM 1g1v1u

The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) has opposed President Bola Ahmed Tinubu’s controversial tax reform bills currently before the National Assembly for consideration.

RMAFC, in a comprehensive nine-page memorandum signed by its chairman, Mohammed Bello Shebi, rejected the principle of derivation over the exisitng system of VAT pooling among other legal, constitutional, and technical objections to the proposed legislation.

According to the document obtained by the Economic Confidential, RMAFC emphasized that it was empowered by Section 162(2) of the 1999 Constitution (as amended) to determine the formula for equitable revenue sharing among the three tiers of government. This mandate also includes ensuring that the formula reflects principles of fairness and justice.

“The Constitution designates RMAFC as the final authority on matters of revenue allocation,” the memorandum stated.

The Commission noted that “As such, no Act of Parliament, including the VAT Act, can infringe upon this constitutional responsibility. Any such attempt would constitute a violation of the Constitution.”

It further maintained that its role as the exclusive arbiter in developing fair revenue allocation formulas must be respected, arguing that any deviation from its constitutional duties could undermine the integrity of the Commission and compromise the principles of justice in revenue sharing.

The Commission, however, called for an approach to Value Added Tax (VAT) allocation that s for the unique nature of VAT as a consumption tax.

Reacting to the issue of derivation, the commission noted that VAT revenue is shared among the three tiers of government with 15% for the Federal Government, 50% for the States, and 35% for Local Governments.

It added that VAT is consumption-based, unlike oil revenue, where 13 percent is returned to the producing states.

“Derivation in fiscal federalism refers to the principle where revenue generated from a specific resource or activity is allocated to the jurisdiction (state or region) where it originated. In Nigeria, this principle is constitutionally recognized, notably in the allocation of oil revenues where 13% of revenue derived from oil is returned to oil-producing states, though different from the VAT derivation. It aims to ensure fairness and economic equity by compensating resource-originating regions for their contributions to the national purse,” the memorandum added.

Continuing, the RMAFC painted a scenario where goods purchased in Lagos (as a point of VAT collection) are consumed in Kano, adding that VAT laws in Nigeria do not provide a clear mechanism to track goods post-sale to the end-use location. “Without robust systems for monitoring consumption patterns, the allocation of VAT based on derivation becomes contentious.”


While highlighting systemic issues in VAT istration, the Commission also argued that the existing VAT system prioritizes revenue pooling and formula-based distribution over strict derivation principles.

It maintained that VAT as a critical source of revenue for the three tiers of government, is a centralized tax collected for redistribution across the Federation, making it crucial to allocate revenues equitably.

Proposing a formula developed by the commission, the RMAFC said this would ensure equitable distribution among federal, state, and local governments.

“Given the dynamics, arbitrary apportioning of percentages for VAT allocation, whether vertically among the tiers of government or horizontally among states and local governments, is both impractical and unconstitutional. There might be Public perception of skewing the law to favour states with higher production or corporate presence, regardless of where consumption occurs. Ignoring the need to less economically developed states and regions and undermining national unity and equity in revenue-sharing.”

Among several recommendations in its memorandum, the RMAFC called on the federal government to empower the Commission to finalize a VAT allocation formula in line with its constitutional mandate.

Also, it noted that this will reinforce Constitutional Mandates by ensuring that VAT allocation strictly follows RMAFC’s framework, not arbitrary provisions in the VAT Act or the proposed reform bill, while also urging dialogue among federal, state, and local governments to secure consensus on the RMAFC’s formula, thereby reducing tensions and ensuring acceptance.

The memo also cautioned legislative or executive measures that undermine RMAFC’s authority and advocates implementing systems like electronic invoicing to tag VAT collections to end- locations, enhancing transparency and accuracy.

According to RMAFC, the proposed tax reform bills threaten national unity and constitutional harmony.

https://tribuneonlineng.com/tax-reform-bills-rmafc-opposes-proposed-vat-sharing-formula/amp/

They must hear word…

You can’t just wake and believe you can manipulate the system to suit you.



Nigerians are not all yoruba


Nigeria is not Lagos state or yorubaland … that sing … o’ yes to Tinubu and cartel

God bless Nigerians

They will soon sack him and replace with Yoruba man… while Igbos keep shouting southern unity

The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

Frigga13:
They will soon sack him and replace with Yoruba man… while Igbos keep shouting southern unity

I his sack for not knowing how consumption tax is managed or its purpose. If it is for the consumer, who collects the tax for goods consumed beyond the shores of Nigeria?
How is the value-addition location rewarded for their efforts to poach investors, lost their land, culture, and values to foreigners? How do they get rewarded for production related expenses like order maintaining task forces(LAWMA and the likes), power, security, and infrastructure?

Everything is not about tribe and ethnicity bro. Logic should prevail atimes and here is one of such case. Even the money the Kano people are using to buy the final goods comes largely from the south so giving them a cut of what they spend is just rewarding them for buying local goods and not a sensible move. If they decide to ditch local goods not produced by their states, can they transport it through lagos by road and lagos will not toll them or can they provide the Forex?

Who wrote this rubbish calling an unelected bureaucrat under the Executive Government the final arbiter in a democracy?

“The Constitution designates RMAFC as the final authority on matters of revenue allocation,” the memorandum stated.

The memo also cautioned legislative or executive measures that undermine RMAFC’s authority and advocates implementing systems like electronic invoicing to tag VAT collections to end- locations, enhancing transparency and accuracy.

The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) principal officers should be suspended by the president with immediate effect.

Imagine unelected appointees taking over policy directives and the mandate of elected executive government.

MadamExcellency:
Who wrote this rubbish calling an unelected bureaucrat the final arbiter?

“The Constitution designates RMAFC as the final authority on matters of revenue allocation,” the memorandum stated.

The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) principal officers should be suspended by the president with immediate effect.

Imagine unelected appointees taking over policy directives and the mandate of elected executive government.

They think with their intestine and not their brains in that north. Consumption tax doesnt mean it cant be collected from point of production in addition to the error you pointed out. Most of those appointees are not fit to lead association of rat-poison sellers in a village market.

CodeTemplar:
They think with their intestine and not their brains in that north. Consumption tax does mean it can't be collected from the point of production in addition to the error you pointed out. Most of those appointees are not fit to lead the association of rat poison sellers in a village market.

An Agency of the government (unelected bureaucrats) is issuing a warning to the Executive and Legislative arms of the government against changing policies they were elected to do.

What I understand from the audacity of this writeup is that Mallam wants to force this tax legislation to a constitutional review to enable the Northeast and Northwest to defeat the proposal with their 13 States thereby denying the proposal the required 2/3rd requirements for changes in the constitution.

Frigga13:
They will soon sack him and replace with Yoruba man… while Igbos keep shouting southern unity

Exactly, very stupid Igbo leaders. I do not know what Tinubu gave them.

MadamExcellency:


An Agency of the government (unelected bureaucrats) is issuing a warning to the Executive and Legislative arms of the government against changing policies they were elected to do.

What I understand from the audacity of this writeup is that Mallam wants to force this tax legislation to a constitutional review to enable the Northeast and Northwest to defeat the proposal with their 13 States thereby denying the proposal the required 2/3rd requirements for changes in the constitution.

Aren't they empowered by the constitution to oversee that function? The man is speaking for his office not as a person.... at least, as they are empowered by the Government to do so, they should at least be consulted and carried along in the formation of the Bill.

That the executive arm of government appoints the judges doesn't make them above the ruling of the Judiciary if found guilty

Tinubu na thief

Reject allllllllll. APC is a evil party that brought suffering to the masses since they took over power.
I regretted voting those evil people all in the name of emilokan

My cut

This bill won’t fly. Modifications must be made. Nigeria is too big to be run by one man.

Where’s the regional government bill they were screaming some months ago?

You must carry everyone along else your work no go show.

If Tinubu can successfully get this new tax bill, he might be able to get more southerners on his side, even though he's being nothing but underwhelming.

How VAT works in its simplest form:

Company A (Distributor) has its headquarters in Lagos. It also has 3 warehouses in Lagos, Rivers, and Kaduna.

Company B in Delta (Retailer) orders products from A. B pays VAT at the time of order to A which will be credited to Lagos. A orders the product from its warehouse in Rivers closer to B. A doesn’t pay VAT to Rivers because A owns the warehouse.

B then sells to consumers who also pay VAT at the time of consumption. After sales, B then subtracts his/her original VAT payment and remits the balance between the VAT he/she collected from customers, and the VAT he/she paid to A. So if B paid N1000 VAT to A and collected N1,100 VAT from customers, B will pay VAT of N100 which will be credited to Delta.

Company A collected the largest VAT because it is paid at the time order. Therefore Lagos gets the highest VAT.


Notes:

1. Lagos will most likely collect the largest chunk of VAT even with the proposed VAT reforms.

2. B only remits the difference between how much it paid and how much customers paid. So Delta VAT will be much lower than Lagos VAT.

3. Rivers doesn’t get VAT in all of these transactions though it was the one who housed the product, and where it was shipped from. VAT is collected at the time of order, and the order of consumption

Bobloco:


https://tribuneonlineng.com/tax-reform-bills-rmafc-opposes-proposed-vat-sharing-formula/amp/

nawa oo u see ehn!

Hmmmm...

MadamExcellency:
Who wrote this rubbish calling an unelected bureaucrat under the Executive Government the final arbiter in a democracy?



The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) principal officers should be suspended by the president with immediate effect.

Imagine unelected appointees taking over policy directives and the mandate of elected executive government.

The same democracy empowered them..stop talking gibberish....Its like usurping CBN or FIRS heads roles and you ask them not to speak out. Instead of us to build strong institutions, we keep building strong men. Nawa to una.

CodeTemplar:
The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

You will realize that the chairman of the RMAFC is an hausa man. They don't want to contribute again to the country they only want bigger FAAC and since their senators and governors are complaining that bill must be ed

Criminals, oshofree people should go and start thinking before contesting for positions especially all our poverty striking states

Their opinion

I have never liked the way tinubu is leading but you see on this tax bill I want him to be firm And resolute even if it is the only good thing he does I will give him a mark.

CodeTemplar:
The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

Brilliant

CodeTemplar:
The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

“The Constitution designates RMAFC as the final authority on matters of revenue allocation,” the memorandum stated.

The Commission noted that “As such, no Act of Parliament, including the VAT Act, can infringe upon this constitutional responsibility. Any such attempt would constitute a violation of the Constitution.”

The RMAFC guy was drawing the attention of those working on the new tax bill to the fact that the RMAFC is the only body constitutionally empowered on matters of revenue sharing.

This attitude of attacking any contrary opinion should cease because evidence has shown time and time again that Tinubu has been making catastrophic economic decisions that have inflicted severe hunger and starvation on Nigerians since coming on board

Well.... that's another angle to the debate that might just be the death knell for the VAT debate

LegendHero

I keep imagining what south west would have been pushing for if the oil in the Niger delta was all domiciled in any of the south west states.

13% derivation given to oil producing states is so little yet Niger delta is not clamouring for more greedy south west politicians only thinking about how they can corner everything to themselves.

Sheuns:
This bill won’t fly. Modifications must be made. Nigeria is too big to be run by one man.

Where’s the regional government bill they were screaming some months ago?

You must carry everyone along else your work no go show.

In your words:"this bill will not fly"; *modifications must be made... "

So when modifications are made, the bill can be ed. Does that mean the bill flew?

aviara:
I keep imagining what south west would have been pushing for if the oil in the Niger delta was all domiciled in any of the south west states.

13% derivation given to oil producing states is so little yet Niger delta is not clamouring for more greedy south west politicians only thinking about how they can corner everything to themselves.

How is the proposed Tax Bills translating into Southwest politicians greed.

Doesn't the proposal favor every state?

Can you explain how it does not favor every state and Local Government?

CodeTemplar:
The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

Is Lagos state or wherever these manufacturers are based not collecting tax/revenue from the companies directly So what are you saying? VAT as we all know is consumer base tax

MadamExcellency:
Who wrote this rubbish calling an unelected bureaucrat under the Executive Government the final arbiter in a democracy?



The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) principal officers should be suspended by the president with immediate effect.

Imagine unelected appointees taking over policy directives and the mandate of elected executive government.

Is the judiciary elected
What about INEC

CodeTemplar:
The RMAFC man is obviously an ignoramus or tribal legend at best, parading as in intellectual. That it is called a consumption tax doesn't mean it is meant to serve the consumer or go to the consumer directly in anyway. It can still be collected at value addition location and reshared in Abuja, which is what Tinubu has done here. Let the ignoramus tell us who collects the VAT for good consumed outside Nigeria but within ECOWAS if the tax is for the consumer as they assume here.

It is a tax that should compensate whoever shoulders the burden of production or value-addition. It will be harsh to allow Lagos poach investors, create enabling environment, lost their land, culture, values to foreigners, suffer environmental degradation, provide ing infrastructure like road, power, security and more, then you treat them equal with where the good are consumed because the textbook says VAT is a consumption (based) tax. It is collected from the consumer for consuming the value added unto the raw input but never meant for the consumer or her location.

It is like saying tolls collected in Kano for a road should go to Lagos or Rivers because the final destination of some of the engers include Lagos and Rivers. The road is a service and is provided by Kano so why reward the destination of the enger? What about engers who end up in Ghana or Cameroon?

If we use this logic of the foolish and greedy RMAFC boss, states may be forced to collect it forcefully like that of a tolled road that serves interstate traffic and there will be chaos and rip offs because they will charge far higher than the flat rate FG is enforcing.

VAT is best managed centrally and redistributed to whoever is absorbing the impact of the value-addition within the value-addition chain accordingly. If nigeria must grow to become a hub where thing are manufactured and sold all over west Africa, this bill is good for rewarding value-adding states.

You're just ranting offpoint
Go and get a proper understanding of what VAT is
Even in the constitution, VAT is not on the exclusive list