BY AMAYINDI YAKUBU
As the recent tax reform package narrowly passes through the second reading, the tax battle between prominent Nigerian elites remains fierce. Will the four tax bills escape another hunt, or will they be thrown out of the hallowed chambers? This will be known in the preceding steps and actions that Nigerians, the presidency, legislatures, and policymakers will take in the coming days.
The presidential Committee on Fiscal and Tax Reform led by Taiwo Oyedele introduced four main tax bills aimed at reforming the current landscape of taxation in Nigeria and harmonizing revenue administration across nation, eliminating double taxation, encouraging private sector investment in critical industries, and boosting disposable incomes through strategic tax exemptions. The four bills are, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment), with each bill addressing specific aspects of tax administration, compliance, and enforcement in Nigeria across various levels of government.
The Tax Reformation
One of the most notable features of the proposed reforms is the planned reduction in corporate income tax rates from 30% to 25% over the next two years. This measure is designed to ease financial pressure on businesses, allowing them to reinvest profits, innovate, and expand their operations. Small businesses with annual turnovers of N50 million or less will also enjoy tax exemptions, including a 0% rate on corporate income tax, VAT, and withholding tax. These provisions are expected to provide critical relief to small and medium-sized enterprises (SMEs), which form the backbone of Nigeria’s economy, encouraging entrepreneurship and stimulating growth across diverse industries.
The reforms extend significant benefits to workers and households, particularly low-income earners. Workers earning below the minimum wage will be exempt from personal income tax, while over 90% of public and private sector employees will experience reduced tax burdens. In addition, essential goods and services such as food, education, healthcare, and renewable energy will attract 0% VAT, while rent and public transportation will be exempted entirely. These measures aim to reduce the cost of living, especially for low-income households who spend a significant portion of their income on basic needs, thereby improving their overall financial stability.
To promote fairness and efficiency, the tax reforms propose a shift in Value-Added Tax (VAT) revenue distribution. Instead of centralizing VAT collections, revenues will be allocated based on where goods and services are consumed. This change reflects VAT’s nature as a consumption tax and ensures states retain revenues proportionate to their economic activity. This equitable model incentivizes states to foster local development and reduces the disparities between states with significant economic activity and those without, encouraging balanced national growth.
In addition to these structural changes, the reforms introduce measures to simplify and harmonize taxation. Over 50 nuisance taxes will be repealed, with the remaining taxes consolidated into fewer, more streamlined levies. The reforms also eliminate minimum taxes for loss-making and low-margin companies, reduce production costs through input VAT credits, and provide tax incentives for export goods, services, and intellectual property. These provisions are expected to enhance business competitiveness, attract foreign investment, and reduce compliance complexity for taxpayers. Establishing the Nigeria Revenue Service to replace the Federal Inland Revenue Service further underscores the government’s focus on creating a more efficient, centralized tax administration system that collaborates effectively with subnational governments and MDAs.
Another innovative feature of the tax reforms is the introduction of the Tax Ombudsman under the Joint Revenue Board (JRB), replacing the existing Joint Tax Board. This office will advocate for taxpayers’ rights, resolve disputes, and simplify tax processes, fostering greater trust and transparency in the system. The overall goal of these reforms is to transform taxation into a tool for inclusive economic development. By lowering the barriers for businesses, providing relief to households, and fostering equity among states, the government aims to alleviate poverty, enhance Nigeria’s global trade competitiveness, and create a business-friendly environment that benefits all Nigerians. These bold measures are a testament to the government’s commitment to addressing systemic challenges and unlocking the nation’s full economic potential.
Although, the proposed bills have advanced to their second reading in the Senate, some lawmakers keep raising concerns about stakeholder engagement and the derivation principle for VAT allocation. The Senate Committee on Finance has been tasked with reviewing the bills and presenting a report within six weeks. Presenting the lead debate, Senate Leader Michael Opeyemi Bamidele described the legislation as a critical step toward overhauling Nigeria’s tax system. “These bills aim to simplify the tax landscape, reduce the burden on small businesses, and streamline tax collection,” he stated during the Senate session.
Reactions of Support and Backlash
The Pointer, monitoring and evaluating the situation on the argumentative tax reform bill gathered reactions and divergent perspectives from various stakeholders engaged in the ongoing discussion.
Speaking on reform bill, Sheikh Gumi described the reforms as a step toward improving Nigeria’s economy. However, he noted that certain aspects, such as the contentious Value Added Tax (VAT) provisions, may require further review. “I believe the contentious VAT issue is the only part that needs to be reviewed; otherwise, it is a good package for all,” he said. Gumi’s endorsement comes amidst backlash from northern leaders against the proposed tax reform bill.
Also commenting on the ongoing discussion, the Catholic Bishop of Sokoto Mathew Kukah strongly supported the bills during an interview. He argued that the proposed reforms could help curb financial recklessness among Nigeria’s elite and pave the way for better fiscal management. “I’m hopeful that this is the beginning of a very long journey of fiscal management and efficiency that can lead to the growth and development of the kind of country that we envision,” Kukah said. Reflecting on Nigeria’s potential, Kukah described the country as an energetic and gifted nation, hindered by poor management and lacking structures to channel its citizens’ creativity.
He emphasized the importance of reforms in addressing systemic inefficiencies and preventing the spillover of societal frustrations into violence. “Nigeria is a very energetic country with people that are so eminently gifted and are roaring to soar at any time. However, our problem is the inability of states to create enough gatherings to contain their citizens’ energy, vision, and competing narratives. This lack of competitive gatherings often spills over into violence,” Kukah observed. While debates on specific provisions persist, the reforms are perceived by some as a critical step toward addressing Nigeria’s economic challenges.
The Ekiti State Caucus in the National Assembly has endorsed the proposed tax reform bills, urging all stakeholders, including state governments, private sector leaders, civil society organizations, and citizens, to approve the initiatives. The caucus lauded the bills as reflecting President Bola Tinubu’s transformative agenda to foster economic growth, inclusivity, and national prosperity.
Senator Neda Imasuen of Edo South, who also chairs the Senate Committee on Ethics, Privileges, and Public Petitions, described the bills as timely and overdue. He emphasized the need for patience and understanding of the proposed reforms.
A group of Northern youths staged a demonstration at the National Assembly supporting the bills, with placards reading slogans like “Leave Senator Barau Alone.” The protesters, led by Tijani Mohammed, described critics of Deputy Senate President Barau Jibrin’s support for the reforms as “enemies of progress.” Mohammed highlighted the potential benefits of the reforms, particularly for increasing state revenue shares, and called for nationwide support.
In his own part, President of the Chartered Institute of Taxation, Samuel Agbeluyi, advocated for integrating national identification systems, such as the NIN and BVN, to enhance tax data efficiency. Despite some reservations, he expressed optimism about the reforms addressing Nigeria’s revenue challenges.
However, The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) raised concerns over the reforms’ potential impact on the oil and gas sector. Speaking at its National Executive Council meeting, PENGASSAN President Festus Osifo urged clarity in revenue collection processes and expansion of tax relief for minimum wage earners and small businesses.
Similarly, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Wale-Smatt Oyerinde, endorsed the reforms while criticizing the backlash from some political elites. He highlighted the significant benefits the reforms could bring if enacted into law.
The reforms sparked debates in both chambers of the National Assembly. During a Senate Committee session, Senator Sani Musa stressed that economic growth is driven by production rather than tax increases. He assured Nigerians that the legislature would consider public concerns to achieve a balanced outcome. In the House of Representatives, controversy erupted when House spokesperson Akin Rotimi Jr. referenced his constituency’s support for the bills during a report presentation. The remarks led to a rowdy session, with Speaker Tajudeen Abass intervening to clarify that Rotimi’s comments were personal opinions. Rotimi later apologized and withdrew his statement, but the incident underscored the contentious nature of the reforms.
Former Vice President, Atiku Abubakar, also expressed concern over the uneven development across Nigeria’s federating units, emphasizing the need for a fiscal system that promotes justice and equity. “I have followed the intense public discourse on the Tax Reform Bills with keen interest. Nigerians are united in their call for a fiscal system that promotes justice, fairness, and equity. They have made it clear that the fiscal system we seek must not exacerbate the uneven development of the federating units by favouring a few states while unfairly penalizing others,” Atiku said.
In an interview with BBC Hausa on Friday, Governor Babagana Zulum of Borno State compared the bill’s swift passage to the prolonged deliberation of the Petroleum Industry Bill, which took nearly two decades to become law. “Why the rush? The Petroleum Industry Bill took almost 20 years before it was finally passed. However, this tax reform bill is being transmitted and receiving legislative attention within a week. It should be treated carefully and cautiously so that even after our exit, our children will reap its benefits,” Zulum cautioned. He expressed concern that the proposed VAT-sharing model would disproportionately favour Lagos and Rivers states a claim that other stakeholders argue against.
In a unified stance, the 24 federal lawmakers from Kano State rejected the proposed tax reform bills, aligning with their state governor, Abba Yusuf. The decision was reached during a caucus meeting on Sunday, chaired by Kano State Deputy Governor Aminu Abdulsalam-Gwarzo and attended by several state representatives.
Speaking at an event on Sunday, Aminu Tambuwal, Former Governor of Sokoto State and Senator representing Sokoto South Senatorial District said, “Let me use this platform to address the issue that is raging for now, the issue of tax reform as presented by President Bola Tinubu. This is the wrong time for any upward review of either VAT or any form of tax; the time is inauspicious and terrible. Already, we are facing hardship as occasioned by the devaluation of the naira and the removal of fuel subsidies that this regime did. We should focus on managing the hardship and see how to bring our people out of it.”
Due to controversy regarding the tax reform bill, at the house of representative, the debate on the tax reform bills was suspended, and a memo dated 30 November 2024, titled “Rescheduling of Special Session on Tax Reform Bills,” signaled delays as lawmakers continued to deliberate on the contentious proposals.
The ongoing political discussion on the proposed tax reform bill in the rhetoric of Mohammed Idris the minister of Information, “This is the very essence and meaning of democracy”. The backlash and support mounting on the reformation of Nigeria’s tax laws is a worthy test of government policies in Nigeria. For individuals from all walks of life in the nation to voice their appeal, plights, concerns, and support on the various components of the four bills is commendable. Meanwhile, the government must as a matter of urgency ensure that they are transparent in their reformation bid, if not Nigerians will certainly kick against any form of extortion or exploitation.
