The House of Representatives has approved a new Value Added Tax sharing formula, allocating 55% to states and 35% to local government councils.

The decision followed the adoption of a report by the House Committee on Finance on four tax bills transmitted to the National Assembly by President Bola Tinubu in October 2024.

Presenting the report, the chairman of the committee, Abiodun Faleke, summarised the extensive review process, which followed a public hearing held from February 26 to February 28, 2025. The report was considered clause by clause and adopted in a session presided over by the Speaker, Tajudeen Abbas.

The committee made 19 key recommendations under the Nigerian Tax Administration Bill, including a revised VAT distribution framework that had been a contentious issue between state governors and the Presidency.

Reports say that Section 77 of the report introduces a new VAT distribution structure. For states, 50% of the revenue is to be distributed equally, 20% based on population, and 30% based on consumption while Local governments will receive 35% of VAT revenue under a similar formula.