Chairman of the Presidential Committee on Fiscal and Tax Reforms, Taiwo Oyedele has stated that the much-debated tax reforms bill presented to the legislature by the government is an initiative to rescue Nigeria’s backward tax system.
Oyedele in an interview on Channels Television themed, ‘Tax Reforms: Why states should not collect VAT,’ stated that Nigeria’s tax system is embarrassingly one of the most backward in the world.
Nigeria’s Tax Reforms
In a bid to reform the tax system in Nigeria, President Bola Ahmed Tinubu on the recommendations of the Presidential Committee on Fiscal and Tax Reforms set up when he assumed office recently forwarded four bills namely: The Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board Establishment Bill to the senate.
The bills were to scale up the country’s tax to GDP revenue and further strengthen the country’s tax system and overall financial position with the broad aim being to streamline Nigeria’s tax administration processes, completely overhaul the nation’s tax operations, and align them with global best practices.
The bills were however met with stiff opposition by the Northern Governors forum and later on the NEC comprising the 36 state governors of the federation.
Opposition to Tax Reforms Bill
The earliest opposition to the tax reforms bill came from the northern governors who felt the derivation based VAT sharing formular proposed in the tax reforms bill was a plan to cut them off revenue sharing and a vendetta against the north.
The National Economic Council (NEC) comprising the 36 state Governors and chaired by the Vice President, Kashim Shettima during a meeting thereafter recommended the withdrawal of the Tax Reforms Bill from before the National Assembly subject to more extensive consultation with stakeholders to ensure alignment on the significant impacts of the proposed tax reforms.
This was coming in addition to lawmakers expressing divergent views over certain areas of the proposed reforms, however the presidency doubled down on its plans insisting that the bill would not be withdrawn from the legislature.
Oyedele Attempts to Allay Fears
In an attempt to allay fears over the bill, Chairman of the presidential committee on tax reforms, Taiwo Oyedele stated Nigeria’s tax system is one of the most backward in the world and the proposed tax reforms is an attempt to rescue the system.
He further noted that the bill not going through would be a sad thing for the country.
“We are in 2024, and anything that will stop the reforms of Nigeria’s tax system will be really sad and I think we can work out the differences for the process to continue and for the bills to be enacted.
“The Nigerian tax administration bill is our term to try and put registration of taxpayers, filing of returns, assessment, doing tax audit, using technology for tax administration. We are engaging with legislators and we believe that Nigerian lawmakers have concerns and we want to summarise the bill for them and I think trust is also a problem.”
He noted that his committee has put a framework in place to allow cooperation between tax authorities and the states in terms of data, tax intelligence and capacity building in the hope that at the end of the reforms, all taxes “would be down to single digit”.
Summary of Tax Reforms Bill
Under the tax reforms bill, The Nigeria Tax Bill seeks to eliminate multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
The Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country with the aim of harmonizing tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance and enhance the revenue for all tiers of government. The Nigeria Revenue Service (Establishment) Bill on the other hand 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.
The Joint Revenue Board Establishment Bill proposes creating a Joint Revenue Board to replace the Joint Tax Board, covering federal and all state tax authorities. This bill would also establish the Office of Tax Ombudsman under the Joint Revenue Board, protecting taxpayers’ interests and facilitating dispute resolution.
All of these provisions are aimed at bringing Nigeria’s ‘backward’ taxation system in line with global standards.
