ChannelsTV, on Monday 2nd December 2024, held a City Corridor session on the Tax Reform Payments throughout which Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Coverage & Tax Reforms offered a simulation of the proposed VAT sharing method to the general public for the primary time (at the least to the most effective of my data).
MTN Nigeria Communications Plc was used as a hypothetical case examine for the simulation to focus on the distinction between the present sharing method based mostly on the Remittance Mannequin of Derivation which has the headquarters impact and the proposed sharing method based mostly on the Consumption Mannequin of Derivation within the Tax Reform Payments.
It’s a proven fact that firms presently remit VAT based mostly on the placement of their headquarters although internally lots of them have details about consumption actions in every state.
Nevertheless, because the present VAT remittance mannequin has by no means required location particular info, a variety of firms could want to start out taking note of their inner database for that goal in preparation for the proposed VAT regime if it takes impact.
Maybe that’s the reason the data to showcase a comparability of the present and proposed fashions utilizing a selected month on a whole foundation will not be available and/or CREDIBLE at this level.
If that’s the case as is probably going so, then at the least it’s higher to simulate utilizing hypothetical knowledge than not having any knowledge to elucidate the affect of the proposed mannequin.
The important thing level of false impression by Governors and a variety of different stakeholders is the proposal to extend the proportion shared based mostly on derivation from 20% to 60%!
The inaccurate understanding is that the proposed 60% would nonetheless be based mostly on the present Remittance Mannequin of Derivation with the headquarters impact. In the meantime, the proposal is 60% based mostly on the Consumption Mannequin of Derivation!
Earlier than the referenced City Corridor session, the simulation was not within the public area and even after the session, it hasn’t actually circulated.
Most stakeholders (Governors, Lawmakers and different members of the general public) would have higher readability with the visible illustration utilizing knowledge (albeit hypothetical), thereby making discussions extra constructive.
There may not have been this degree of opposition and mistrust pushed by misinformation if such an illustration evaluating present and proposed eventualities had been available.
One thing easy however essential just like the simulation would possibly hopefully douse stress on the VAT concern with extra readability and higher understanding by stakeholders. This may permit appreciation of different elements of the Tax Reform Payments which have been obfuscated by the extraordinary VAT debate.
The simulation must be circulated as extensively as attainable and used as the idea of engagement at totally different boards going ahead.
This text is contributed by Hafiz Bakare a Advisor and Former Bank Chief Govt.
Be First to Comment