Presidential aide clears air on Tinubu’s #TaxReformBills

Abdullateef Fowewe

The Special Assistant to President Bola Tinubu on Social Media, Dada Olusegun has clarified the confusion and explained things that should be known about the tax reform bills.

Olusegun in a statement via his X (Twitter) handle on Thursday, stated that the tax reform bills are four different bills that seek to bring everything about taxation and administration of tax in Nigeria under four different pieces of legislation, describing the bill as a compendium of taxes charged in Nigeria.

He wrote, “The tax reform bills are four different bills that seek to bring everything about taxation and administration of tax in Nigeria under four different pieces of legislation. The bills are as follows: ‘The Nigeria Tax Bill’, ‘The Nigeria Tax Administration Bill’, ‘The Nigeria Revenue Service Establishment Bill’, ‘The Joint Revenue Board Establishment Bill’.

“The Nigeria Tax Bill is where all major taxes imposed on individuals and companies are clearly stated as well as the rates. This bill is just like a compendium of taxes charged in Nigeria. The Nigeria Tax Bill basically amalgamated all the existing laws in which provisions for taxation were made. If passed, this bill will lead to the repeal of 11 laws that contain provisions on the imposition and collection of taxes.

“Some of the major provisions contained in the Nigeria Tax Bill that have reaching bearing on both individuals and businesses include: ‘Exemption of individuals earning N800,000 or less from paying income tax, ‘Only those earning above N50 million get to pay 25% personal income rate’, ‘Exemption of small businesses from paying income tax’, ‘Reduction of company income tax rate from 30% to 25% in 2026 for medium and large companies’, ‘Elimination of minimum income tax of 1% charged on the gross earnings of medium and large companies that did not declare profit’, ‘Harmonisation of 2.5% education tax, 1% NITDA tax and 0.25% NASENI tax that many firms pay in addition to their company income tax annually into a single development levy of 2% that will be used exclusively to fund student loans from 2030’, ‘Review of the VAT revenue sharing formula where states now take 55% of the revenue instead of 50% while the federal government’s share of VAT revenue shrinks from the current 15% to 10%. The share of LGAs remain the same, ‘Progressive increase in VAT rate from the current 7.5% to 10% in 2025; 12.5% between 2026-2029 and 15% from 2030’, ‘Exemption of many basic items consumed by the poor from VAT such as food items, medical services and pharmaceuticals, educational fees, electricity etc.’, ‘Tax exemptions to encourage investment in both associated natural gas and non-associated gas’.

“The Nigeria Tax Administration Bill on the other hand is the bill that sets out how the tax authorities will administer the taxes, which include assessment, collection of, and accounting for the various tax revenues they collect. The bill also outlines the powers and functions of the tax authorities, which taxes are reserved exclusively for the NRS to collect and which ones are reserved for the states among other miscellaneous provisions relevant to the effective administration of tax in Nigeria.

“Some of the major provisions of the Nigeria Tax Administration Bill include: Drawing the rich into the tax net, Payment of taxes and royalties in Naira, NRS to collect revenues hitherto collected by some regulatory agencies such as Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), NPA, NIMASA, etc., Deployment of technology to automate tax assessment, collection and accounting. This will enhance tax collection, especially on companies that operate digitally such as social media companies, music streaming platforms, etc., Deduction of unremitted tax revenues by MDAs that serve as agents of tax authorities from their budgetary allocations, a new VAT derivation model where 60% of VAT revenue standing to the credit of the states are shared based on derivation while 20% is shared based on population sizes and the other 20% is shared equally among the states, Instalmental payment of tax, Funding of tax refund accounts by deducting a percentage of the money collected by the tax authority before distribution, Establishment of Local Government Revenue Committee to handle collection of taxes, fines and rates under the jurisdiction of each local government area, Harmonisation of all tax offences and penalties to ensure compliance.”

He further stressed that the Nigeria Revenue Service Establishment Bill seeks to change the name of the Federal Inland Revenue Service into the Nigeria Revenue Service to reflect the fact that it collects revenue for the federation and not just the federal government since most of the revenue it collects is shared by the three tiers of government.

“The bill also specifically empowered the NRS to administer all taxes including the other taxes hitherto collected by some federal agencies like Nigeria Customs Service, NUPRC, NPA, NIMASA etc.

“Finally, the Joint Revenue Board Establishment Bill provided for the establishment of three separate bodies namely: Joint Revenue Board of Nigeria to help harmonise all taxes in the country and scrap nuisance taxes while also creating a national database of taxpayers, the Tax Appeal Tribunal to settle tax disputes between tax authorities on issues such as residency for personal income tax collection etc., Office of the Tax Ombudsman to help taxpayers get justice if they feel aggrieved against the tax authorities,” Olusegun added.