Nigeria’s House of Representatives has passed four key tax reform bills proposed by President Bola Tinubu, aiming to boost government revenue and improve tax administration. These bills include the Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill. The proposed reforms seek to streamline tax collection, enhance efficiency, and modify tax rates across various sectors.
One of the most debated aspects of the bills was the proposed Value-Added Tax (VAT) increase, which was initially set to rise from 7.5% to 12.5% by 2026 and eventually reach 15% by 2030. However, following public outcry and stakeholder consultations, the House of Representatives decided to retain the VAT rate at 7.5%. The bills also proposed the creation of the Nigeria Revenue Service to replace the Federal Inland Revenue Service, aiming to improve revenue generation and compliance.
The reform bills faced opposition, particularly from the Northern Governors’ Forum, over concerns about the VAT derivation model. Initially, the bills proposed allocating 10% of VAT revenue to the federal government, 50% to states, and 35% to local governments. After extensive deliberations, the House revised this formula, increasing the states’ share to 55% while maintaining the federal and local government shares at 10% and 35%, respectively. Amendments were also made regarding inheritance tax and the funding of agencies like TETFUND.
With the House’s approval, the bills now await concurrence from the Senate before they can be transmitted to President Tinubu for final assent. If signed into law, these reforms are expected to reshape Nigeria’s tax landscape, improve revenue collection, and strengthen fiscal federalism.
