The Nigerian Senate is on the brink of passing a series of transformative Tax Reform Bills that promise significant changesNigerian to the nation's tax landscape.
A pivotal aspect of these reforms is the exemption from income tax for individuals earning below N1 million annually.
This move is designed to shift the focus of taxation towards prosperity rather than poverty, as emphasized by the federal tax executives who have been instrumental in clarifying the bills' objectives.
The proposed legislation comprises four major bills: the Nigerian Tax Bill, the Tax Administration Bill, the Nigerian Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
These bills aim to harmonize major taxes into a single framework, simplify tax processes, and ensure a more equitable distribution of Value Added Tax (VAT) revenue.
Currently, the VAT sharing formula disproportionately benefits states like Lagos, which host the headquarters of many corporate organizations.
The reform seeks to address this imbalance by proposing a distribution based on consumption within states.
Initially, the bills faced resistance from some lawmakers. However, after presentations by key figures such as Tanimu Yakubu, Director-General of the Budget Office, and Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service, many senators were swayed.
As Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, articulated, the reforms are not about taxing poverty but about fostering economic growth and efficiency.
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