Tax Reform Bills Pass Second Reading in House of Representatives

On Wednesday, February 12, 2025, the House of Representatives in Nigeria passed four significant tax reform bills through their second reading.

These bills were initially sent to the National Assembly by President Bola Tinubu in 2024, following recommendations from the Taiwo Oyedele-led Committee on Fiscal Policy and Tax Reforms.

Details of the Bills

The bills under consideration are:

• The Nigeria Tax Bill 2024
• The Tax Administration Bill
• The Nigeria Revenue Service Establishment Bill
• The Joint Revenue Board Establishment Bill

These pieces of legislation aim to overhaul aspects of the tax system in Nigeria, addressing issues from tax administration to revenue collection mechanisms.

Controversy and Opposition

Since their proposal, the bills have stirred considerable controversy. They faced criticism and opposition, notably from northern governors and various opposition politicians who called for their withdrawal from the legislative process.

The contention primarily revolved around the implications of these reforms on existing tax structures and regional economic balances.

Debate in the House

During the session, numerous lawmakers voiced their support for the bills, acknowledging the necessity for tax reform. However, concerns were raised by some members, including Representative Sada Soli, who pointed out potential conflicts with the 1999 Nigerian Constitution, particularly regarding the issue of derivation.

Soli emphasized the need for clarity on how revenue from taxes would be distributed among states to prevent any constitutional ambiguities.

Legal and Constitutional Concerns

The debate also touched upon the amendment of 40 acts, which the bills propose to modify. Lawmakers requested that these acts be explicitly laid before Parliament to ensure transparency and thorough scrutiny.

Additionally, the issue of multiple taxation on property transactions was highlighted, where both the buyer and seller would be liable for tax under the new provisions. This has raised concerns about the fairness and impact of such taxation.

Next Steps

Having passed the second reading, the bills are now set to go through a public hearing. This step is crucial for gathering public input and further refining the legislation.

The committee tasked with scrutinizing these bills will have the responsibility to address the various issues and concerns raised during the parliamentary debates before moving towards final passage.

The progression of these bills through the legislative stages signifies a pivotal moment in Nigeria’s approach to fiscal policy and tax administration, aiming to streamline processes but also navigating through a landscape of political and economic sensitivities.

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