June 2, 2025

The Nigerian Senate has passed all four tax reform bills proposed by President Bola Tinubu, marking a major step toward reshaping the country’s tax system. The new legislation is designed to modernise tax administration, boost revenue collection, and ensure a more balanced distribution of tax proceeds among the federal, state, and local governments. Highlights of the New Tax Reform Bills Key Changes from Earlier House Versions Compared to the versions passed by the House of Representatives, the Senate made several notable changes: With Senate approval secured, the harmonised tax bills are now awaiting President Tinubu’s assent, signaling a significant shift in Nigeria’s approach to taxation and public finance. While these reforms are a positive step, many observers argue that genuine transformation must go beyond legislation. For the treasury and other public institutions to function effectively and free from corruption, governance structures must be strengthened. This involves defining clear roles, aligning positions with relevant expertise, streamlining bureaucratic processes, and making merit-based appointments the norm. Such reforms are critical to building a transparent, efficient, and accountable public service system. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

The Federation Account recorded a total revenue inflow of N7.4 trillion in the first quarter of 2025, according to data from the Federation Account Allocation Committee (FAAC). This revenue was remitted by major government revenue-generating agencies, including the Federal Inland Revenue Service (FIRS), Nigeria Customs Service, and others. Of the total inflow, N4.96 trillion was distributed as statutory allocations among the Federal Government, 36 states, and 774 local government areas between January and March 2025. The FAAC, chaired by the Minister of Finance, Mr. Wale Edun, comprises finance commissioners from all 36 states, the Accountant General of the Federation, and representatives from the Nigerian National Petroleum Company Ltd (NNPC), FIRS, Customs, Revenue Mobilisation, Allocation and Fiscal Commission, and the Central Bank of Nigeria (CBN). Revenue Sharing Framework The Federation Account operates under a legal structure that divides funds into three primary components: Under statutory allocation: For VAT: Oil-producing states also receive an additional 13% derivation fund. Q1 Allocation Breakdown Of the N4.96 trillion disbursed: Monthly Breakdown Factors Behind Revenue Growth FAAC attributed the improved revenue performance to: Fiscal Outlook and Government Response Despite the improved revenue, economic analysts have urged all levels of government to manage the funds responsibly, especially amid: In response to declining global oil prices, which have fallen below the $75 per barrel benchmark in the 2025 budget, the Federal Government announced plans to: Finance Minister Wale Edun emphasized the need for fiscal discipline: “Our budget was based on 2 million barrels per day at $75 per barrel, and we are now underwater relative to those assumptions. When your budget revenue is below expectation, you have to hunker down, conserve, and prioritize.” To bridge the budget shortfall, the government plans to: Edun noted that the 2025 budget includes a provision for asset sales, which may exceed initial expectations due to rising investor interest. He concluded that President Bola Tinubu’s economic agenda aims to stabilize the economy and attract investments that promote job creation and poverty reduction. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.