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Legislative bills

Nigeria's Tax Reform Bills Ready for Presidential Assent

Strategic Insights

— 2 min read

After months of debate and negotiation, the National Assembly has completed the harmonization process for the four tax reform bills. The bills, which aim to overhaul Nigeria's tax system, have been passed by both the Senate and the House of Representatives and are now ready for presidential assent. The proposed legislation includes the Joint Revenue Board (Establishment) Bill, the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Administration Bill, and the Nigeria Tax Bill. The bills aim to establish a new tax system that will promote economic growth and reduce tax evasion.

Key Takeaways:

  • The four tax reform bills have been harmonized by the Conference Committee, with all contentious provisions settled through consensus.
  • The bills include the imposition of a 4% development levy on the assessable profits of all companies subject to tax, excluding small companies and non-resident entities.
  • The levy will be collected by the Nigeria Revenue Service and paid into a designated special account.
  • The distribution of the levy has been proposed, with 50% allocated to the Tertiary Education Trust Fund, 15% to the Education Loan Fund, and 8% to the Nigeria Information Technology Development Fund.
  • A new clause, Clause 158, was adopted, introducing a 5% surcharge on chargeable fossil fuel products.
  • The two Chambers are in agreement on the revenue-sharing formula for Value Added Tax (VAT): 10% for the Federal Government, 55% for State Governments and the Federal Capital Territory, and 35% for Local Governments.
  • The VAT revenue allocated to States will be further distributed using the following criteria: 50% based on equality, 20% on population, and 30% based on the place of consumption.
  • Local Government allocations will follow a 70:30 split, based on equality and population, respectively.
  • Both Chambers agreed to retain the existing VAT rate of 7.5%.
  • Ahmed Jaha warned legislative staff not to alter any clauses during final proofreading and documentation, to avoid unauthorized edits.

Statistics:

  • 45 differences were found in the Nigeria Tax Administration Bill.
  • 12 differences were found in the Nigeria Revenue Service Bill.
  • 9 differences were found in the Joint Revenue Board Bill.
  • 46 differences were found in the Nigeria Tax Bill.
  • 50% of the 4% development levy will be allocated to the Tertiary Education Trust Fund.
  • 15% of the 4% development levy will be allocated to the Education Loan Fund.
  • 8% of the 4% development levy will be allocated to the Nigeria Information Technology Development Fund.
  • 5% surcharge on chargeable fossil fuel products will be introduced.
  • 10% of VAT revenue will go to the Federal Government.
  • 55% of VAT revenue will go to State Governments and the Federal Capital Territory.
  • 35% of VAT revenue will go to Local Governments.

Sources:

  • National Assembly of Nigeria
  • House of Representatives of Nigeria
  • Senate of Nigeria
  • Nigeria's Ministry of Finance
  • Borno State Government

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