The Nigerian Senate advanced the discourse on the proposed tax reform bills by granting them a Second Reading. This milestone underscored their potential despite dissenting voices from certain lawmakers.

Leading the legislative deliberations, Senate Leader Michael Opeyemi Bamidele characterized the reform initiative as “a transformative stride to rejuvenate the nation’s tax framework.” According to him, the overarching objectives are to demystify the tax structure, alleviate fiscal pressures on burgeoning enterprises, and optimize revenue collection mechanisms.

This ambitious reform agenda, orchestrated under the aegis of the Presidential Committee on Fiscal and Tax Reform chaired by Taiwo Oyedele, has ignited fervent discourse across the polity.

A Quartet of Legislative Proposals

The reform blueprint is encapsulated in four distinct legislative drafts, each delineating specific aspects of taxation and its administration. These include:

1. Nigeria Tax Bill
2. Nigeria Tax Administration Bill
3. Nigeria Revenue Service Establishment Bill
4. Joint Revenue Board Establishment Bill

Nigeria Tax Bill: Simplifying the Tax Code

The Nigeria Tax Bill amalgamates pre-existing tax statutes into a consolidated framework, effectively repealing 11 archaic laws. Its salient provisions aim to foster equity and clarity, notably:

• Income Tax Exemptions: Individuals earning N800,000 or less annually are absolved from income tax, eliminating the current levy of N84,000.
• Progressive Taxation: A 25% personal income tax rate applies solely to those earning over N50 million, a shift from the current threshold of N3.2 million.
• Small Business Relief: Ninety percent of Nigerian businesses are owned by enterprises with an annual turnover of N50 million or less, which is exempt from corporate income tax.
• Corporate Tax Reductions: A phased reduction of company income tax from 30% to 25% by 2026 for medium and large firms.
• Streamlined Levies: Consolidation of the education tax, NITDA tax, and NASENI tax into a singular 2% development levy designated to fund student loans by 2030.
• VAT Adjustments: A restructured revenue-sharing model enhances state allocations to 55% while reducing federal receipts to 10%. The VAT rate is set to rise, culminating incrementally by 15% by 2030.
• Pro-Poor Measures: Essentials such as staple foods, pharmaceuticals, and utilities are exempted from VAT to safeguard vulnerable demographics.

Nigeria Tax Administration Bill: Operational Precision

This bill articulates the modus operandi for tax authorities, focusing on efficient assessment, collection, and accountability. Key highlights include:

• Widening the Tax Net: Financial institutions must report high-value transactions, ensuring the affluent contribute their fair share.
• Naira Payment Flexibility: Taxpayers may settle obligations in foreign currency or naira at prevailing exchange rates, bolstering currency stabilization efforts.
• Technological Integration: Automation is mandated for tax processes, particularly targeting digital enterprises like social media platforms.
• Localized VAT Attribution: VAT revenue will reflect actual consumption points rather than company headquarters, rectifying disparities favouring states like Lagos.
• Structured Refund Mechanisms: A dedicated tax refund account will be pre-funded to ensure prompt restitution.

Nigeria Revenue Service Establishment Bill

This legislation rebrands the Federal Inland Revenue Service as the Nigeria Revenue Service (NRS) to signify its federated mandate. The NRS will centralize revenue collection duties, previously dispersed among various regulatory bodies, allowing these agencies to concentrate on oversight roles.

Joint Revenue Board Establishment Bill

The creation of three pivotal bodies is proposed to harmonize tax administration:

1. Joint Revenue Board of Nigeria for nationwide tax standardization and eliminating redundant levies.
2. Tax Appeal Tribunal to adjudicate disputes involving tax jurisdictions.
3. Office of the Tax Ombudsman to safeguard taxpayers’ rights against administrative overreach.

Conclusion

The quartet of tax reform bills represents a paradigmatic shift to modernise Nigeria’s tax architecture. These reforms prioritise low-income earners and small businesses by simplifying compliance, reducing fiscal inequities, and fostering economic growth. Far from being contentious, they embody a visionary and equitable approach to tax administration deserving widespread support from all patriotic Nigerians.

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