MTN Contributes N200bn Monthly in VAT, Driving Tax Reform Debate
MTN Nigeria, the nation’s largest telecom company, pays over N200 billion in Value Added Tax (VAT) monthly, making it the single biggest contributor to the country’s VAT revenue, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.
Speaking at Channels Television’s Town Hall on Tax Reforms, Oyedele highlighted significant disparities in the current VAT allocation system, revealing that all VAT paid by MTN is credited solely to Lagos State, where the company’s headquarters is located, despite the fact that services generating this revenue are consumed nationwide.
“MTN is the largest contributor to VAT in Nigeria,” Oyedele stated. “They pay over N200bn every month, and the gap between them and the second-largest contributor is massive. However, all this VAT is currently allocated to Lagos, even as calls are made across states like Kano, the FCT, Ekiti, Edo, and Kebbi.”
As part of the ongoing tax reform efforts, the committee has proposed a new framework to ensure equitable distribution of VAT revenues based on consumption rather than the corporate headquarters’ location.
Under the proposed redistribution model, Lagos State, which now retains the full N200bn from MTN, would see its share reduced to around 20 per cent. The remaining revenue would be distributed more fairly among other states where the services are consumed.
“This adjustment ensures states where VAT is generated get their fair share,” Oyedele explained. “While Lagos State’s share decreases slightly, every other state stands to gain under the new system.”
The tax reform bill, designed to address inefficiencies and promote fairness in Nigeria’s fiscal policies, has sparked debate among stakeholders. Critics have accused the committee of advancing policies that may negatively impact certain regions.
Oyedele, however, dismissed these claims, arguing that the current system is flawed and in need of urgent correction. “If something is being done wrongly, how can Lagos State or anyone oppose reforms aimed at fixing it?” he questioned.
The proposed reforms, which include provisions for revenue redistribution and efficiency improvements, are seen as pivotal to ensuring fairness and sustainability in Nigeria’s tax system.