The Federal Government’s ambitious Tax reform bills, currently under review by the National Assembly, aim to dismantle the complexities of Nigeria’s tax system. These reforms, introduced as part of President Bola Tinubu’s broader economic agenda, seek to eliminate over 50 redundant charges and repeal at least 11 outdated laws. The government aims to create a fairer, more efficient, and business-friendly tax environment to support Economic Development and alleviate the burden on ordinary Nigerians. Over the years, the proliferation of excessive charges has stifled local businesses and discouraged investments.
Therefore, by introducing these reforms, the administration intends to coordinate its regulations, simplify compliance, and ensure a more equitable distribution of duty responsibilities. This comprehensive overhaul is critical in aligning fiscal policies with economic stabilisation and social equity. As part of these reforms are four key legislative proposals, which include the Nigeria Tax Bill, the Nigeria Revenue Service Establishment Bill, the Joint Revenue Board Establishment Bill, and the Nigeria Tax Administration Bill. Together, these bills aim to consolidate existing laws, eliminate redundancies, and provide a unified framework for its administration.
New structure aims to lighten the financial load on average Nigerians.
Furthermore, the Nigeria Duty Bill, for instance, will amalgamate all major charges levied on individuals and companies, clearly defining rates and removing ambiguities. One significant shift proposed in the reforms is the recalibration of VAT to reflect consumption patterns. Unlike the current system, where VAT is tied to the location of a company’s headquarters, the new model will base it on where goods and services are consumed. This change is expected to correct regional disparities in revenue generation and ensure a more balanced allocation of resources across states.
Meanwhile, the reforms will prioritise fairness and inclusivity. The government has committed to reducing its burden on low-income earners and small businesses. Under the new framework, those earning modest incomes will pay little to no levies, allowing them to better manage their finances amidst economic pressures. On the other hand, high-income earners and large corporations will shoulder a greater share of the duty responsibility, ensuring that contributions are proportionate to earnings. To facilitate compliance and transparency, digital systems are being introduced to streamline fee payments.
Stakeholders have expressed support for the proposed economic reforms.
These innovations aim to minimise bureaucratic inefficiencies and foster accountability, making the system more accessible and reliable for all stakeholders. Additionally, by addressing issues such as double Taxation and arbitrary levies imposed by various authorities, the reforms are poised to create a more predictable and stable business environment. Civil Society Organisations (CSOs) and other stakeholders have supported the system. At the 2024 National Tax Conference in Abuja, groups such as the Civil Society Legislative Advocacy Centre (CISLAC), ActionAid, and Oxfam Nigeria presented recommendations to align fiscal policies with social equity and economic stability.
Among their proposals were measures to ensure data-driven decision-making, expand VAT exemptions for essential goods, and establish clear indicators for monitoring gender inclusivity in levy policies. Concerns were raised about the timing of certain reforms, particularly the proposed VAT increase, given the current Inflation rate exceeding 30 percent. Stakeholders urged the government to prioritise policies that alleviate economic pressures on Vulnerable Populations while ensuring revenue from the reforms effectively bridges Infrastructure gaps and supports social development initiatives.
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Lastly, this decision to repeal 11 existing laws reflects the determination to modernise the country’s financial system. By doing so, the administration seeks to eliminate confusion and promote compliance. This move is expected to reduce the administrative burden on businesses and foster a more conducive environment for entrepreneurship and investment. The reforms further address long-standing challenges such as bill incentives and waivers. The government aims to maximise its impact on economic development by reviewing its technical framework and ensuring efficient administration.