Nigeria Senate Passes President Tinubu's Tax Reform Bills for Next Step of Enactment into Laws

Strategic Insights -

The Senate has passed all four of President Bola Ahmed Tinubu's proposed tax reform bills, marking a significant milestone in the legislative process. The bills, which aim to overhaul the nation's tax system, have undergone revisions in the Senate, with some changes differing from those made by the House of Representatives. The next step is for both the Senate and the House of Representatives to set up a joint committee to harmonize the changes and present a unified version to the President for assent.

Key Takeaways:

  • The Senate passed all four tax reform bills, including the Nigeria Tax Bill, the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Administration Bill, and the Joint Revenue Board (Establishment) Bill.
  • The bills will become law when the President assents to them, with the President required to perform this duty within 30 days of receiving the consolidated bills from the Clerk to the National Assembly.
  • The Senate made some changes to the bills, including revising the value-added tax (VAT) sharing formula and the 4% development levy sharing formula.
  • The VAT rate was retained at 7.5%, with the Federal Government's share reduced from 15% to 10%, and the State Governments' share increased from 50% to 55%.
  • The 4% development levy sharing formula was revised, with contributions to various funds as follows: Tertiary Education Trust Fund- 50%, Nigerian Education Loan Fund - 15%, National Information Technology Development Agency - 10%, and others.
  • The Senate rejected implied inheritance tax proposals, clarifying that there was no intention to reintroduce an inheritance tax.
  • The National Assembly will present the harmonized versions of the Tax Reform Bills to the President for assent.
  • If the President assents, significant changes will be made to the Nigerian tax system, requiring taxpayers to reorganize their systems and processes.

Statistics:

  • The Senate passed the tax reform bills between Wednesday and Thursday, 7th and 8th of May 2025.
  • The House of Representatives passed the Tax Reform Bills on 18 March 2025.
  • 60% of the amount standing to the credit of states and local governments will be distributed among them based on derivation, but news reports indicate that the derivation ratio has been reduced to 30%.
  • 90 days will be given to taxpayers after the Tax Reform Bills are signed into law for them to adjust their processes and comply with the new laws.

Sources:

  • "Nigeria Tax Bill, Nigeria Revenue Service (Establishment) Bill, Nigeria Tax Administration Bill, and Joint Revenue Board (Establishment) Bill" - as passed by the Senate on 7th and 8th of May 2025.
  • "Mondaq Ltd, 2025 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com" - a news article providing details on the tax reform bills.