The House of Representatives has voted to retain VAT at 7.5%, rejecting the proposed increase to 15% by 2030.
Lawmakers also dismissed the planned reintroduction of inheritance tax, previously presented under the guise of taxation on family income.
Stakeholders, including NACCIMA, have stated they will await full approval details before making any public comments on the reforms.
Meanwhile, the Movement for Socialist Alternative (MSA) has urged Nigerians not to celebrate the rejection of VAT increases too soon.
Chairman of the House Committee on Finance, James Faleke, presented the report, highlighting extensive public input considered during deliberations.
The proposed tax reforms include four key bills aimed at restructuring Nigeria’s taxation system and improving revenue collection efficiency.
Key Amendments to Tax Reform Bills
1. Nigeria Revenue Service Bill
Significant revisions to Section 4 limit the Nigeria Revenue Service’s (NRS) scope to federal-level revenue collection only.
State and FCT taxpayers will no longer be under the jurisdiction of the Nigeria Revenue Service following these new changes.
The composition of the governing board was revised to include six executive directors, one from each geopolitical zone.
Each state and the FCT will have a representative, ensuring balanced federal character representation across all governance levels.
The bill also amends the NRS funding structure, setting a fixed cost-of-collection rate at 4% of total revenue.
Additionally, borrowing powers have been restricted, requiring Federal Executive Council and National Assembly approval before securing loans.
2. Joint Revenue Board (Establishment) Bill
Changes in this bill focus on transparency and stronger oversight in tax administration across Nigeria’s revenue agencies.
Tax Appeal Commissioners will no longer need business management experience, as lawmakers deemed it unnecessary for the role.
The Tax Ombud’s office will now receive direct funding from the Consolidated Revenue Fund to enhance its independence.
The Tax Appeal Tribunal (TAT) will also have independent funding, removing reliance on the Federal Inland Revenue Service.
3. Nigeria Tax Administration Bill
The timeline for issuing taxpayer identification numbers (Tax IDs) has been extended from two working days to five.
Companies ceasing operations must now file their tax returns within three months instead of six months.
A key amendment to Section 22 ensures taxable supplies are attributed to their place of consumption for tax fairness.
A VAT fiscalization system has been introduced under Section 23 to enhance compliance and reduce tax evasion risks.
Banking transaction reporting thresholds have been raised from ₦25 million to ₦50 million for individuals and ₦100 million to ₦250 million for businesses.
Tax authorities must now obtain court orders before seizing movable assets, reinforcing judicial oversight on tax enforcement.
A new provision mandates access to electronically stored taxpayer information, reflecting modern digital storage and record-keeping practices.
Section 77 introduces a new VAT revenue-sharing formula, distributing 70% equally among local governments and 30% based on population.
Other Key Amendments and New Penalties
- The proposed VAT increase to 15% by 2030 was completely rejected by the House of Representatives.
- The tax rate for petroleum gains has been reduced to 30% instead of the previously proposed 85%.
- Provisions related to excise duties have been deleted due to concerns over their potential economic impact.
- Small company turnover classification has been increased to ₦100 million, while the asset cap remains ₦250 million.
- Virtual Assets Service Providers (VASPs) now face strict penalties, including heavy fines and possible license suspensions for non-compliance.
Faleke emphasized that the reforms aim to create a modern, efficient, and transparent tax system supporting economic growth.
The House of Representatives is expected to deliberate further on the report before reaching a final decision.
Stakeholder Reactions
NACCIMA Awaits Final Details Before Commenting
NACCIMA President Dele Oye stated he would reserve comments until final approval details of the tax reform bills are available.
CSO Warns Nigerians Not to Celebrate Yet
The Movement for Socialist Alternative (MSA) criticized the tax reforms, stating they disproportionately burden Nigeria’s working-class population.
MSA argued that tax increases favor billionaires while leaving workers struggling with inflation, hunger, and poor wage conditions.
The group called on the NLC and TUC to demand a higher minimum wage to match inflation rates.
They also urged labor unions to mobilize a one-day warning strike against tax policies that burden workers unfairly.
The House of Representatives will continue deliberations before finalizing its position on Nigeria’s new tax reforms.
