On Thursday, Nigeria’s House of Representatives approved significant amendments to four tax reform bills submitted by President Bola Tinubu in October.
The bills—the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill—aim to modernize tax collection, distribution, and governance across federal, state, and local levels.
During the plenary session presided over by Speaker Abbas Tajudeen, lawmakers addressed critical issues such as inheritance tax, Value Added Tax (VAT) rates, revenue distribution, and the continued funding of agencies like TETFUND, NASENI, and NITDA from development levies. The amendments followed a clause-by-clause review led by James Abiodun Faleke, Chairman of the Committee on Finance.
Key Amendments and Provisions
- VAT Distribution Formula:
Lawmakers adopted a VAT revenue-sharing model proposed by the Nigerian Governors’ Forum (NGF):- 50% allocated equally among states
- 20% based on population
- 30% based on consumption
- 10% to the Federal Government
- 55% to State Governments and the Federal Capital Territory
- 35% to Local Governments
- VAT Rate Maintained at 7.5%
The House rejected proposals for an incremental VAT increase to 10% by 2025 and 15% by 2030, opting to retain the current 7.5% rate. - Inheritance Tax Concerns Addressed
Lawmakers clarified that inherited assets will not be taxed before distribution, easing concerns about a potential reintroduction of inheritance tax. - Tax Waiver Restrictions on the President and Governors
Any future tax exemptions must now receive approval from the National Assembly or State Houses of Assembly, limiting executive powers. - Penalties for Bribery and Tax Fraud
Individuals or corporate entities attempting to bribe or unduly influence tax officials will face fines of up to ₦2 million or a maximum three-year jail term. - Legislative Oversight on Revenue Deductions
The Accountant-General of the Federation must now seek legislative approval before deducting unremitted revenue from government agencies. - Continuous Funding for Key Agencies
The House upheld the provision for ongoing funding of TETFUND, NASENI, and NITDA through the four percent development levy fund. - Exemption of Military Salaries from Income Tax
Recognizing their service, lawmakers approved an exemption of military personnel salaries from income tax.
The bills, now passed by the lower chamber, will proceed to the Senate for further approval before being sent to President Tinubu for final assent.
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