House of Representatives Approves Tax Reform Bills, Retains 7.5% VAT Rate

House of Representatives Approves Tax Reform Bills, Retains 7.5% VAT Rate

The House of Representatives has approved the new tax reform bills, introducing key changes to VAT distribution, inheritance tax, and funding for government agencies. The reforms aim to ensure a more balanced revenue-sharing system while maintaining existing tax rates.

One of the most significant changes is the new VAT sharing formula. Under the new arrangement, 50% of VAT revenue will be distributed equally among all states, 20% based on population size, and 30% based on consumption levels. This formula is designed to create a fairer distribution system that considers both population and economic activity.

The 7.5% VAT rate has been retained, meaning there will be no increase in the existing Value Added Tax rate. This decision is expected to provide stability for businesses and consumers while ensuring steady government revenue.

The House also amended the controversial inheritance tax clause, clarifying that any inheritance received before the dissolution of an estate will not be subject to taxation.