- MTN Nigeria contributes over N200 billion in VAT monthly, making it the largest contributor to Nigeria’s VAT pool
- Current VAT distribution to Lagos State could change, aiming for a fairer allocation based on actual consumption across Nigeria, not company headquarters
- Presidential Tax Reform Committee chair, Taiwo Oyedele, discussed proposed reforms to improve VAT equity and address systemic flaws
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has revealed that MTN Nigeria is the largest contributor to the nation’s Value Added Tax (VAT) pool, paying over N200 billion every month.
This makes the telecommunications giant the single biggest contributor to the country’s VAT revenue, with a significant gap between it and the second-largest contributor.
Oyedele shared this information during a recent appearance as a panellist on Channels Television’s Town Hall on Tax Reforms.
He also took the opportunity to highlight disparities in the current VAT distribution system and discussed ongoing reforms designed to address these issues.
The current VAT distribution system attributes all of MTN's VAT payments to Lagos State, where the company’s headquarters is located. However, Oyedele pointed out that the services generating this VAT revenue are consumed nationwide, not just in Lagos.
“MTN is the largest contributor to VAT in Nigeria. They pay over N200 billion every month, and the gap between them and the second-highest contributor is huge,” Oyedele explained.
“Today, all the VAT paid by MTN is credited and attributed to Lagos State, even though calls are made in Kano, the FCT, Ekiti, Edo, or Kebbi.”
One of the key proposals in the tax reform bill is a change in the VAT allocation process. The aim is to ensure a more equitable distribution of VAT revenues based on actual consumption, rather than the location of a company’s headquarters.
To illustrate the potential impact of the reforms, Oyedele presented a hypothetical model for redistributing MTN’s VAT contributions. Under this model, Lagos State would receive approximately 20 per cent of the VAT paid by MTN, with the remainder shared more fairly among other states across Nigeria.
“This adjustment ensures that states where the VAT is generated get their fair share. When you analyse the data, you see Lagos State’s share reduces slightly, but every other state gains,” Oyedele disclosed.
The tax reform bill, which has been discussed recently, aims to address longstanding challenges in Nigeria’s fiscal policies. It includes provisions for more balanced revenue redistribution, addressing system inefficiencies, and promoting fairness in how VAT is allocated across the country.
The proposal has sparked some debate, with critics arguing that it could have negative consequences for certain parties.
However, Oyedele defended the proposed reforms, stressing that the current system is flawed and unfair.
“If you’re doing the wrong thing, how can Lagos State disagree with us when we propose to fix it?” he quizzed.
VAT rate hasn’t been increased, remains 7.5%, Finance Minister Edun clarifies
Meanwhile, TheRadar reported that the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed that the rate for Value-Added Tax (VAT) had not been increased but remained 7.5 per cent as contained in the relevant tax laws and chargeable on goods and services.
In a statement on Monday, September 9, Edun debunked reports that the VAT rate had been upwardly adjusted to 10 per cent from 7.5 per cent.
