The global approach to tax policy continues to evolve, driven by economic needs and calls for fairness. Recent reports reveal substantial increases in Value Added Tax (VAT) collections, particularly highlighted by Nigeria’s Federal Inland Revenue Service (FIRS) announcing impressive figures for 2024. The Nigerian revenue agency disclosed at its 2025 Management Retreat on Thursday, January 30, 2025, the country’s VAT collections surged to N6.72 trillion, reflecting an 84.62% increase compared to the previous year’s N3.64 trillion.
Amina Ado, Coordinators Director of FIRS' Large Taxpayers Group, presented data indicating remarkable growth across all tax categories, emphasizing the pivots around import and non-import VAT. Non-import VAT demonstrated unprecedented ascension, rising to N5.13 trillion, representing a growth of 75.09%, whereas import VAT more than doubled—from N715 billion to N1.59 trillion, translating to 122.38% growth. The performance of Company Income Tax (CIT) also stood out, recording 102.5% rise from N3.35 trillion to N6.78 trillion compared to the previous year.
Other non-oil tax revenue continued to flourish, with the overall growth reaching 97%, driven by Nigeria’s strategic efforts to diversify its economy and reduce dependency on oil revenues. Despite this success, the oil-related tax revenue failed to meet expectations. The targeted N7 trillion generated from the Petroleum Profit Tax (PPT), Hydrocarbon Tax (HT), and Upstream CIT segment reached just N5.76 trillion, 82.3% of projections. This shortfall was predominantly attributed to lower-than-anticipated crude oil production, averaging 1.55 million barrels per day against projections of 1.78 million.
Meanwhile, proposals are on the table to radically change the VAT revenue distribution formula among federal and sub-national entities. Current laws dictate allocations where 15% goes to the Federal Government, 50% to the states and the Federal Capital Territory (FCT), and 35% to local governments. The Nigeria Governors’ Forum (NGF) has endorsed new comprehensive sharing proposals advocating for equitable resource distribution based on equality, derivation, and population. This move emphasizes the necessity of reforming fiscal policies to create balanced economic growth among regions.
Across the sea, the Philippine Senate is also pursuing tax reforms, with Senator Francis Tolentino filing Senate Bill 2970 aimed at exempting both electricity and internet services from the current 12% VAT. This legislative move responds to the high cost of electricity, which has burdened consumers, leading to concerns over stifled economic growth. Tolentino noted, “By eliminating VAT on electricity and internet sales and services, the government would alleviate financial pressures on consumers and businesses alike, fostering a more inclusive and expanded digital economy.”
The proposed changes seek to amend the National Internal Revenue Code of 1997, ensuring electricity sales by generation, transmission, and distribution companies, as well as services provided by internet service providers (ISPs), are exempt from VAT. The senator emphasizes the importance of these services today, particularly as education and employment increasingly rely on affordable internet access.
These legislative initiatives highlight broader trends aiming to ease the financial burden on consumers and reshape the economic landscapes of developing nations facing challenges caused by high utility costs. Both Nigeria and the Philippines showcase distinct, yet overlapping, methods of addressing tax policy’s impact on everyday life, aiming to stimulate growth through reform.
Given Nigeria's aspiration to generate N25.2 trillion from taxes in 2025, significantly above the N21.6 trillion collected the previous year, it is clear the increase of non-oil tax revenue is fundamental to meeting these ambitious goals. Observers note the discussions surrounding VAT reforms will play pivotal roles not just for revenue generation but for equitable financial governance among various levels of government.
Meanwhile, Senator Tolentino’s proposals serve as potential relief amid rising costs of living, ensuring Filipinos could maintain access to basic services as they navigate economic uncertainties. By potentially eliminating VAT on these essentials, the Philippines may encourage more extensive participation in the growing digital economy and maintain consumer spending during challenging fiscal times.
Overall, the shifts in tax policy, whether through steep VAT increases, performance surges, or legislative exemptions, underline the importance of adaptive approaches to governance focused on achieving sustainable economic growth and reducing inequities.