The proposed tax reform bills by President Bola Ahmed Tinubu have sparked heated discussions nationwide. While advocates and detractors argue passionately, many Nigerians remain unaware of the profound changes these reforms seek to bring. From cutting taxes for small-scale enterprises to alleviating the financial strain on lower-income groups, here’s a simplified breakdown of what’s at stake.
What’s the Buzz About?
President Tinubu recently introduced four tax-related bills to the National Assembly. These include the Nigeria Tax Bill, with significant highlights like:
1. Gradual VAT Increment
Value Added Tax (VAT) rates will progressively climb from the current 7.5% to 15% by 2030. However, essential goods like food and medicine will remain exempt.
2. Cost Relief on Essentials
VAT exemptions extend to food, electricity, education fees, and healthcare services, ensuring affordability for vulnerable populations.
3. Energy Investment Boosts
Generous tax incentives will support gas-related projects, both associated and independent, to bolster energy availability.
Overhauling Tax Administration
The Nigeria Tax Administration Bill proposes innovative approaches to ensure fairness and compliance:
4. Tracking High-Spenders
Individuals spending over ₦25 million monthly or businesses with monthly expenses exceeding ₦100 million will be targeted for audits using bank data.
5. Payment Options
Taxes assessed in foreign currencies can now be settled in Naira at official exchange rates, adding flexibility.
6. Centralised Revenue Collection
The Nigeria Revenue Service (NRS) will centralise tax collection, freeing agencies like Customs to focus on regulatory duties.
7. Guaranteed Tax Refunds
Verified tax refunds will be swiftly processed, as funds will be directly earmarked from collections.
Empowering Local Authorities and Simplifying Compliance
The Joint Revenue Board Establishment Bill introduces groundbreaking changes:
8. Strengthened Local Governance
Local Government Authorities (LGAs) will independently manage taxes, levies, and fines within their jurisdictions, improving efficiency.
9. Uniform Penalties Nationwide
Standardised penalties for tax violations will ensure consistent compliance across the country.
10. Efficient Dispute Resolution
A Tax Appeal Tribunal will address disputes, including disagreements over tax residency.
11. Taxpayer Advocacy
A dedicated Tax Ombudsman Office will protect citizens from unfair treatment by tax authorities.
Why It Matters
Supporters of Tinubu's tax reforms argue they are growth-oriented, pro-poor, and efficiency-driven. By exempting small businesses and low-income earners from burdensome taxes while fostering local economic activities, these reforms aim to diversify Nigeria’s revenue streams beyond oil and establish a fairer tax framework.
What’s Next?
Having passed the second reading in the Senate, the bills now await public hearings. As the discussions continue, experts agree: if executed effectively, these reforms could revolutionise Nigeria’s tax landscape and uplift millions of lives.
- Rt Hon Engr Chinedum Orji FNSE, FNICE (Ikukuoma Abia) was the Speaker of the 7th Abia State House of Assembly
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