*President Bola Ahmed Tinubu restates the fundamental objective of setting up the Presidential Committee on Tax and Fiscal Policy Reforms August 2023 is to reposition the Nigerian economy for 鈥榖etter productivity and efficiency鈥� while making the operating environment for investments and businesses more conducive

Gbenga Kayode | 绿帽献妻

The Federal Government has said though there may be differences in approach, or specific provisions of the current tax reforms bills in Nigeria, what is undisputable is the need to review the West African country鈥檚 tax laws, and how the authorities administer them to serve the overall national development agenda.

President Bola Ahmed Tinubu, who noted this recently, clarified that his administration would continue to 鈥渞espect and welcome the advice and recommendations of the National Economic Council (NEC), an essential constitutional organ of government 鈥渙n economic matters.鈥�

绿帽献妻 reports President Tinubu, October 2024, had sent the bills, requesting the National Assembly (NASS), in Abuja, FCT, to consider and pass four Nigerian Tax Reforms Bills.

The National Assembly Complex, in Abuja

These include the Nigeria tax bill, the tax administration bill, and the joint revenue board establishment bill respectively.

However, weeks after submission of same to NASS, the new Tax Reforms Bills have continued to generate lots of interests and/or controversies, meeting some much resistance from particularly the Northern part of Nigeria.

Aside from some Federal legislators stating their views of the new tax bills, Nigeria鈥檚 National Executive Council also urged President Tinubu to withdraw the 鈥渃ontroversial bills鈥�.

Federal legislators, groups, others take positions on tax reforms bills

Earlier, Senator Ali Ndume, representing Borno South in the Upper Legislative Chamber of NASS, speculatively had said the tax bills President Bola Ahmed Tinubu sent to the National Assembly are 鈥渄ead on arrival鈥� if there are no consultations on them.

In the same vein, the Northern States Governors鈥� Forum (NSGF) toed the Senator鈥檚 line and kicked against the bills, peradventure prompting the National Economic Council (NEC) to urge President Tinubu to withdraw the bills for further consultations with key stakeholders in the tax administration system in Nigeria.

While speaking on a Channels TV programme Ndume also argued that consumers could not afford to pay more tax because of the current state of the Nigerian economy.

The Federal regulator stated: 鈥淢y advice is that as the Northern Governors and the NEC has said that the President should withdraw the bills, and should do more consultation and he should carry Nigerians and the public along.

鈥淏ut if it goes on like that, I can tell you that it will be dead on arrival. We don鈥檛 need to study the bill.鈥�

He further noted: 鈥淭he general thing is that Nigerians are not willing to pay any tax now considering the situation we have faced because this is government of the people.

鈥淎 country is working on tax reforms that will reduce the burden on the citizens. In fact they have abolished most of the taxes from 17 to three percent.鈥�

Nigerians 鈥渃an only pay tax when they can afford it,鈥� he averred.

Nonetheless, Hon. Abdulmumin Jibrin, another member of the National Assembly, has expressed confidence that the controversial tax reforms bills President Tinubu presented to the Federal Legislature would be passed into law after consideration.

Speaking on the private television show also, Jibrin, representing Kiru/Bebeji Federal Constituency of Kano State in the House of Representatives, declared that the bills are 鈥渘ot dead on arrival鈥�.

He also emphasised that Northern Nigeria is not against the said tax reforms bills.

The lawmaker explained his position, noting 鈥渋t is not a consensus in the North that this bill should be shut down.

鈥淎nd talking for myself and also how I know the National Assembly operates in terms of following procedures of the passage of the bill, I can be able to tell you authoritatively that the bill is not dead on arrival.鈥�

Jibrin stated: 鈥淚 can explain to you that hundreds of clauses in these bills are things we have been pursuing for ages. And I will be able to tell you this: the work that we are going to do for Nigerians to see all the clauses in detail and everything, I can confidently tell you that bill will go through the processes in the National Assembly, and it will be passed.鈥�

According to him, after the passage of the bills, Nigerians will be able to know that they are not inimical to the interest of the country, neither are they inimical to the Northern part of the country.

NASS to consider bills with inputs before passage into laws

Amid the deepening controversies over the Tax Reforms Bills submitted to NASS, and sequel to the NEC intervention to the effect, that President should withdraw the bills form the National Assembly for consultations, President Tinubu Friday, November 1, in a statement, clarified the legislative process, which has already begun on the tax reforms bills, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.

Mr. Bayo Onanuga, Special Adviser to the President on Information and Strategy, Friday disclosed the President acknowledged that he received the National Economic Council’s (NEC) recommendation that the tax reform bills already sent to the National Assembly be withdrawn for further consultation.

The President commended the National Economic Council members, especially Vice-President Kashim Shettima and the 36 State Governors, for their advice.

However, Tinubu noted that the legislative process, which has already begun, offers an opportunity for inputs and necessary changes without withdrawing the bills from the Federal legislature.

Urging the Council to allow the process to take its full course, the Nigerian leader yet welcomed further consultations and engagements with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage.

Why Presidential Committee on Tax and Fiscal Policy Reforms, by Tinubu

President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023 with only an objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive.

The Federal Government said the objective remain had remained more critical even today than ever before.

The statement also explained the Committee worked for over a year and received inputs from various segments of society across the geopolitical zones.

These, the Federal Government stated, include trade associations, professional bodies, different Ministries and Government Agencies, Governors, traders, students, business owners, and the organised private sector.

Onanuga affirmed the tax reforms bills that emerged were distilled from the extensive work of the Presidential Committee.

Fundamental objectives of tax reforms bills

Highlighting the objectives of the tax reforms regime, the Presidency said the tax bills before the National Assembly aim to streamline Nigeria鈥檚 tax administration processes, completely overhaul the nation鈥檚 tax operations, and align them with global best practices.

The government further noted the major highlights of the four Bills in NASS are as follows:

1. The Nigeria Tax Bill: This Bill seeks to eliminate multiple taxation and make Nigeria鈥檚 economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
2. The Nigeria Tax Administration Bill (NTAB): This Bill proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across Federal, state and local jurisdictions to ease taxpayers’ compliance and enhance the revenue for all tiers of government.
3. The Nigeria Revenue Service (Establishment) Bill: The Bill seeks to re-establish the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect its mandate as the revenue agency for the entire federation, not just the Federal Government.
4. The Joint Revenue Board Establishment Bill: This Bill proposes creating a Joint Revenue Board to replace the Joint Tax Board, covering federal and all state tax authorities.

The fourth bill will also establish the Office of Tax Ombudsman under the Joint Revenue Board, protecting taxpayers’ interests and facilitating dispute resolution.

Besides, the overarching objective of the tax reform bills is to effectively coordinate federal, state, and local tax authorities, thereby eliminating the overlapping responsibilities, confusion, and inefficiency that have plagued tax administration in Nigeria for decades.

It also explained that under existing laws, taxes such as Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.

The statement disclosed the proposed reforms seek to consolidate these numerous taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into “a unified structure to reduce administrative fragmentation.”

The government as well clarified while there may be differences in approach or specific provisions of the new tax bills, what is not in contention is the need to review our tax laws and how we administer them to serve our overall national development agenda.

The Presidential aide stated: “President Tinubu will continue to respect and welcome the advice and recommendations of the National Economic Council, an essential constitutional organ of government on economic matters.”

Oyedele: Why tax reforms bills generate keen interest among Nigerians

In regard to the genesis of the current interests cum controversies over the tax reforms bills in NASS, Mr. Oyedele Monday, November 11, 2024, noted: 鈥淚t is not unusual for a major reform, such as this to elicit keen interest from all stakeholders.

鈥淭his development is necessary to achieve the best outcomes that benefit all as it provides an opportunity for further engagements which is healthy for the system.鈥�

He also noted: 鈥淚n this regard, we have collated the most frequently asked questions about the tax reform bills to better inform all stakeholders and address some misinformation in circulation.鈥�

The Chairman as well disclosed the Presidential Fiscal Policy and Tax Reforms Committee has collated and offered reliable answers to some 10 Most Frequently Asked Questions (FAQs) on Tax Reforms Bills in Nigeria.

Oyedele, in a blog note on the published document, especially dissected Question 3 of the FAQs:聽 Why is the VAT proposal generating so much controversy? Are we trying to fix what is not broken?

The Committee answered that 鈥渢he current VAT system is fractured. The major issues include:

(i) Disputes over VAT administration between some states and the federal government resulting in some landmark judgements and pending court cases.

This is compounded by the fact that VAT is not stated in the 1999 Constitution thereby creating a lacuna. Our analysis shows that a central collection system is more efficient and benefits all.

Once the contentious issues have been resolved, then VAT can be properly included in the constitution. The current sharing formula of FG 15%, States 50% and LGs 35% is proposed to become FG 10%, States 55% and LGs 35%.

(ii) Imposition of parallel consumption taxes in some states along with VAT which increases the tax burden on the people and contributes to multiple taxation. The reform seeks the discontinuation of all consumption taxes other than VAT.

(iii) Basis of distribution – the current formula for sharing VAT among states is based on 20% derivation, 50% equality and 30% population. The tax reform proposes a different model of derivation which will attribute VAT to the place of supply and consumption rather than the current model which attributes VAT to the state where it is remitted thereby favouring states with companies鈥� headquarters.

Further, derivation under the new model will account for 60% of VAT distribution for better equity and to discourage any state from seeking to administer VAT as a state tax, which will not only result in much lower revenue for all tiers of government but will impose a higher burden on businesses.

According to Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the proposed derivation model is contained under S.22(12) of the Nigeria Tax Administration Bill.

The provision states in part: 鈥淔or the purpose of attribution, any return under this section shall provide details of derivation of taxable supplies by location ….鈥�

He equally observed that the ongoing controversy has arisen from the perception that the proposed formula would lead to lower revenue for some subnationals (states and local government councils) in the country.

Oyedele, however, explained the 5 percent to be ceded by the Federal Government could be set aside for 鈥渆qualisation transfers to cater for any shortfall to a state under the new model.鈥�

The Chairman added: 鈥淭his ensures that no state is worse off in the short term while significantly enhancing economic activities and revenue for all states in the medium to long term.鈥�

Please also watch the explainer .

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