- The Senate has passed the tax reform bills for a second reading
- The bills seek to review Nigeria’s tax system
- They have been greeted with criticisms and controversies
The Senate has passed the tax reform bills forwarded to it by President Bola Tinubu in October 2024 for a second reading.
The bills were passed on Thursday, November 28, following a debate among the lawmakers. They were then referred to the Committee on Finance for further legislative action and asked to report back within six weeks.
Senate President Godswill Akpabio, urged the committee to invite the National Economic Council (NEC), Nigerian Governors’ Forum (NGF), and civil society organisations to the public hearing on the bills.
The Senate Leader, Opeyemi Bamidele, led the debate on the bills, saying it is a significant move to streamline the country’s tax system.
Bamidele said, “The Nigerian tax reforms bill is a significant move to overhaul the country’s tax system. These bills aim to simplify the tax landscape, reduce the burden on small businesses, and streamline how taxes are collected.
“In broad terms, the four bills seek to ensure uniformity in tax revenue administration in Nigeria in accordance with the provisions of the Constitution, eliminate the incidence of double taxation across the country, deploy taxation as a tool to encourage private sector investments in critical industries and boost individual disposal incomes through targeted tax exemptions as captured in the various Bills.
“In the area of tax exemptions, there is a proposal to exempt those whose salaries are not more than the minimum wage from P.A.Y.E deductions while small businesses with an annual turnover of N50 million or less are equally exempted from payment of taxes.
“Similarly, there is a proposed huge reduction in company income tax from the current 30 per cent to 25 per cent by 2026, as part of a deliberate attempt to curtail the incidence of double taxation and multiplicity of taxes and levies.”
Details of the tax reform bills
President Tinubu had sent the four tax bills to the National Assembly for approval in October. The bills are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
The Nigeria Tax Bill 2024 is expected to provide the fiscal framework for taxation in the country, the Tax Administration Bill will provide a legal framework for all taxes in the country and reduce disputes, the Nigeria Revenue Service Establishment Bill will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill is expected to create a tax tribunal and a tax ombudsman.
The bills seek to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state gets VAT for what it generates within its territory.
They also seek to remove VAT from essential consumption, education, healthcare, transportation, and accommodation to benefit low-income earners.
On Wednesday, November 27, the president’s economic team, which includes the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele; the Chairman of the Federal Inland Revenue Tax, Zacchaeus Adedeji and the Director-General of Budget Office, Tanimu Yakubu, were at the Senate’s plenary to explain the bills.
Oyedele told the lawmakers that the bills aimed to lift the tax burden on 90 per cent of Nigerian workers.
He has often said Nigeria’s tax system is among the most outdated globally and requires urgent reform.
Bills have been greeted with criticisms
There have been controversies and criticisms around the tax reform bills from different quarters since its initiation.
During a meeting in October, the Northern Governors Forum said some aspects of the bills, especially the VAT components, are skewed against the interests of the North.
The forum further called on the lawmakers from the region in the National Assembly to reject the bills.
The bills were also challenged by the National Economic Council, which comprises the governors and chaired by the Vice President, Kashim Shettima.
The council asked President Tinubu to withdraw the bills from the National Assembly for further consultations, but the president insisted that any differences should be resolved in parliament.
Senate approves Tinubu’s $2.2 billion loan request to fund 2024 budget deficit
Meanwhile, TheRadar reported that the Senate approved President Bola Tinubu’s loan request of $2.2 billion to partially finance the N9.7 trillion budget deficits for the 2024 fiscal year.
The approval followed the presentation of a report by the Chairman of the Senate Committee on Local and Foreign Debts, Aliyu Wamakko, during plenary on Thursday, November 21.
