Taiwo Oyedele, head of the presidential committee on fiscal policy and tax reforms, has stated that Nigeria’s upcoming tax law changes are poised to substantially boost revenue collection.
In a recent interview with Bloomberg, Oyedele highlighted the transformative impact of these reforms.
On October 3, President Bola Tinubu requested the national assembly to review and pass four key tax reform bills. These bills include the Nigeria Tax Bill, the Tax Administration Bill, and the Joint Revenue Board Establishment Bill.
The proposed legislation seeks a gradual increase in the value-added tax (VAT) rate to 10% by 2025 while lowering the company income tax (CIT) rate to 27.5%, down from the current average of 30%.
Additionally, the reforms will raise personal income tax (PIT) to 25% for high-income earners starting next year, from the existing rate of around 20%.
Furthermore, Tinubu has proposed replacing the Federal Inland Revenue Service (FIRS) with a new entity, the Nigeria Revenue Service, to enhance tax administration.
However, these initiatives faced resistance from the Northern States Governors Forum (NSGF), which, after a joint meeting with the northern traditional rulers’ council at Kaduna government house on October 28, expressed concerns.
The NSGF urged the national assembly to reject any measures that might negatively impact the northern region, emphasizing the need for fair and balanced national policies to prevent any region from being marginalized.
Responding to these concerns, the presidency assured the governors on October 31 that the proposed tax changes were not intended to disadvantage any region.
Instead, the reforms aim to improve the well-being of Nigerians and optimize tax systems across the country.
Although the National Executive Council (NEC) asked President Tinubu to consider retracting the bills to allow for more consultations, the president suggested that the legislative process should proceed to enable thorough review.
Oyedele underscored that, if implemented, these tax reforms could double Nigeria’s revenue in the next two to three years, raising the share of tax revenue as a percentage of gross domestic product (GDP) from 9% to approximately 18%.
“If we are moving from 9 percent to 18 percent, that means we are doubling it,” he said.
While Oyedele acknowledged that some contentious aspects might be modified, he emphasized that the overall direction of the reforms would remain intact.
“The worst case scenario is to drop the controversial issues.
“There’s an outcome of it going ahead as proposed, or the one that goes ahead with modification, which is okay,” he added.
The federal government has also provided assurances that these tax bills, once enacted, will not hinder the funding and effectiveness of national agencies.
