Thursday, November 28, 2024 -The Nigerian Senate is set to pass the controversial Tax Reform Bills today, exempting those earning below N1 million per annum from the tax net.
This comes after the Federal Government’s tax executives including the
Director-General, Budget Office, Tanimu Yakubu; the Executive Chairman, Federal
Inland Revenue Service, FIRS, Zacch Adedeji; and the Chairman, Presidential
Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele on Wednesday,
November 27 explained to senators the benefits of the tax bill to the
Nigerian economy if passed into law .
The tax executives said that the bills were to tax prosperity and not
poverty and that those earning less than One Million Naira a year would be
exempted from income tax.
During Wednesday’s plenary session, Deputy President of the Senate,
Senator Barau Jibrin (APC, Kano North) said that debate on the tax bills will
continue on Thursday.
In his presentation, Taiwo Oyedele said the reform was not planned to
tax poverty but prosperity and most importantly, to “correct lopsided tax gain
derivation.”
He said :
“The committee proposes four major bills aimed at overhauling the tax
system. The Nigerian Tax Bill seeks to harmonize major taxes into one
legislation, simplifies tax processes, and proposes exemptions for low-income
earners.
“The Tax Administration Bill aims at establishing standards for tax
administration, promotes the use of technology, and aims to streamline tax
collection.
“Nigerian Revenue Service Establishment Bill proposes the establishment
of a new revenue service to improve tax collection and coordination among
agencies while the Joint Revenue Board Establishment Bill aims to enhance
collaboration among tax authorities and create a Tax Ombudsman to protect small
businesses.
“Key proposals of the tax reform bills are elimination of minimum tax
for loss-making companies; Introduction of a 15% effective tax rate on profits
for large companies; removal of VAT on essential goods and services; and
increased tax thresholds for personal income tax to exempt low-income earners.”
“The current VAT sharing formula is deemed unfair, favouring states with
major corporate headquarters. The proposal includes a more equitable
distribution based on consumption within states as against current sharing
formula which lopsidedly favours Lagos State, being host to headquarters of
corporate organizations.”
“Today, we are taxing people that earn N30,000 a month. That’s N1,000 a
day. How can anybody survive earning N30,000 a month? Even if they live alone,
they will do transport, they will buy food, they will pay rent, they will pay
for electricity. They cannot survive. So we are proposing in the bill before
you that anybody earning N800,000 naira a year, including an extra N200,000 for
rent, about N1 million a year, should not pay personal income tax. By the way,
this threshold is not even the highest in Africa. It’s still lower than many
small African countries,” he said.
In conclusion , the team told the federal lawmakers that the tax reform
bills are four different pieces of legislation that seek to bring everything
about taxation and administration of tax in Nigeria under four different pieces
of legislation.
The bills are the Nigeria Tax Bill; the Nigeria Tax Administration Bill;
the Nigeria Revenue Service Establishment Bill and the Joint Revenue Board
Establishment Bill.
Recall that on September 3, 2024, President Tinubu transmitted four tax
reform bills to the National Assembly for consideration, following the
recommendations of the Presidential Committee on Fiscal and Tax Reforms headed
by Taiwo Oyedele for the review of existing tax laws.
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