The House of Representatives Committee on Finance has modified key provisions in the tax reform bills submitted by President Tinubu.
During plenary, Committee Chairman Rep. James Abiodun Faleke presented reports on the consolidated tax reform bills for further legislative review.
The bills aim to enhance revenue collection, improve tax administration, and restructure Nigeria’s fiscal policies for sustainable economic development.
Key Changes and Modifications
VAT Rate Retained at 7.5%
The committee rejected the proposed VAT increase, ensuring the current 7.5% rate remains unchanged for the foreseeable future.
Modification of Inheritance Tax
Only heirs investing inherited assets in income-generating businesses will be taxed on returns, not the inherited estates.
TETFUND, NITDA, and NASENI to Continue Operations
The proposed discontinuation of funding for these agencies by 2030 has been reversed by the House Finance Committee.
Tax Collection and Revenue Sharing Adjustments
The VAT derivation formula now prioritizes consumption-based attribution rather than revenue allocation based on company headquarters.
Taxable persons must submit VAT returns by the 21st of every month, regardless of business activity levels.
Fiscalisation and Digital Tax Compliance
The Federal Inland Revenue Service (FIRS) will determine and implement a phased transition for electronic tax reporting systems.
Addressing Stakeholder Concerns
Rep. Bappah Aliyu Misau confirmed that over 90% of contentious issues raised during public hearings have been addressed effectively.
Lawmakers from the North initially opposed specific provisions, but consensus was reached after extensive negotiations and deliberations.
Red Flags and Remaining Concerns
Despite modifications, concerns persist regarding provisions granting excessive powers to the presidency and tax authorities nationwide.
- Presidential Tax Exemptions: Section 75 allows the president to exempt any company from income tax at personal discretion.
- Asset Seizure Without Court Approval: Section 60 empowers tax authorities to seize and sell assets within 14 days.
- Expanded Surveillance Powers: Authorities can investigate individuals based on lifestyle assessments, raising fears of political misuse.
