The Nigerian Senate has on Thursday passed for a second reading four controversial tax reform bills introduced by President Bola Tinubu.
These bills, namely the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill, aim to overhaul Nigeria's tax system. The passage followed a debate among lawmakers, with Senate Majority Leader Opeyemi Bamidele leading the discussion.
Bamidele explained that the bills are designed to simplify tax administration, reduce the burden on low-income earners, and eliminate double taxation and the multiplicity of taxes and levies paid by companies.
A major proposal within the bills is a new revenue-sharing formula, allowing state governments to receive 55% of VAT, while the federal government takes 10%, leaving local government shares unaffected.
The bills also propose tax exemptions for individuals earning below the minimum wage and small businesses with an annual turnover of N50 million or less.
Additionally, there is a planned reduction in company income tax from 30% to 25% by 2026. These measures are intended to encourage private sector investment and boost individual disposable incomes.
Despite support from several senators, including Sani Musa and Tahir Monguno, some opposition was voiced. Senator Ali Ndume expressed concerns about the timing and certain provisions related to derivation and VAT, suggesting the need for further consultation.
However, Senate President Godswill Akpabio put the bills to a voice vote, and the majority voted in favor, referring them to the Committee on Finance for further review within six weeks.
The bills have sparked debate due to their potential impact on Nigeria's economic landscape, with proponents arguing they will modernize the tax system and critics questioning the timing and specific clauses.
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