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Tag: Taiwo Oyedele

Oyedele: 98% of workers to be exempted from PAYE

Majority of Nigerian workers will not pay tax on what they earn when the new law takes effect in January.

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, said about 98 per cent of Nigerian workers will be exempted from Pay-As-You-Earn (PAYE) .

Oyedele spoke during a session at the ongoing 31st Nigerian Economic Summit (NES31) in Abuja.

Under the new tax structure, he said, poor Nigerians would be exempted from personal income tax, while high-net-worth individuals would be subject to higher rates.

“The poor will not pay personal income tax,” he said.

“Those who earn more and have greater means will pay more. That is how fairness works in a modern economy.”

Oyedele stated that small and low-income companies would also enjoy tax exemptions to strengthen their operations and create more jobs.

He said: “We are considering tax-exempt stickers for nano businesses to protect them from harassment by state and local government officials.

“These are the smallest operators — street vendors, petty traders, artisans — they should be allowed to thrive.”

He explained that the tax reforms are designed to protect low-income earners and those living around the poverty line, while ensuring a more equitable and efficient tax system.

“The more inequality you create, the more time bomb you have,” Oyedele said.

“These reforms are designed to strengthen governance around revenue generation, improve accountability, and ensure that tax revenues are effectively utilised.”

According to him, the comprehensive tax reforms, which form part of President Bola Tinubu’s broader fiscal policy agenda, aim to enhance Nigeria’s sovereign credit rating, lower borrowing costs for both government and businesses, and stimulate private-sector investment.

Oyedele said the reform effort was not without personal risk, revealing that he had received death threats because of his role in driving the initiative.

“Reform is tough,” he said. “I have suffered all kinds of things, including death threats. But I am not scared. I recently celebrated my 50th birthday.

“Even if anything happens, I have done my bit. The reforms belong to Nigerians. The reforms don’t belong to Mr. President.”

He said the reforms seek to build a fairer system in which wealthy individuals and large corporations contribute more to the country’s development.

“If we don’t pay our taxes in an orderly manner, we’ll pay them in a disorderly manner.

“We’ve seen that in the past few years with over N30 trillion printed, which is part of the inflation we’re dealing with and the devaluation of the naira.

“We don’t want that to happen. We’ve seen countries like Zimbabwe where prices double every other day.”

Read Also: Senate proposes 10-year passport ban on Nigerians convicted abroad

Responding to concerns that state and local governments might resist the reforms, Oyedele assured that members of the Joint Tax Board (JTB), representing all 36 states and the FCT, were fully part of the committee’s deliberations and had expressed support for the new framework.

According to him, the new system would not deprive states of revenue but would, in fact, help them earn more from the Federation Account without burdening vulnerable citizens.

“Last year, all the states generated N3.36 trillion from taxes imposed on their people,” he said.

“If that N3.36 trillion is not generated in 2026, the states will not do worse. We are convinced that no state will be bankrupt. We can’t do better by not taxing our most vulnerable.”

Oyedele cited recent improvements in national revenue distribution as evidence that the fiscal reforms were already beginning to yield results.

“Last month, the Federation Account Allocation Committee (FAAC) shared N2.2 trillion to the three tiers of government,” he said.

He also criticised outdated and regressive tax provisions that burden the poor, citing examples such as the so-called “wheelbarrow tax.”

“Some of the tax provisions in our constitution are retrogressive,” Oyedele said.

“How will you ask anyone to pay wheelbarrow tax? That is why we have sent ten amendment proposals to the National Assembly to amend sections that need to change in line with the tax reforms.”

According to him, the committee is also working on expenditure reforms to ensure that tax revenues are used efficiently and transparently.

“We have worked on the expenditure side,” he explained.

“We are working seriously on fiscal regimes to ensure transparency and prudence in government expenditure so that Nigerians get full benefits of their taxes.”

October 8, 2025
Tinubu reducing tax burden on Nigerians, says Oyedele

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has said the administration of President Bola Tinubu has not increased the tax yoke on Nigerians but has rather reduced it through well thought out reforms.

Speaking on national television, Oyedele said the administration’s priority is to simplify the system, grant relief to workers, and ease the burden on businesses.

He explained that from January, Nigerians earning N100,000 or less a month will no longer pay personal income tax. “That is above the minimum wage. Even middle-class Nigerians earning up to N1.8 or N1.9 million annually will see reductions. Only the very high-income earners will pay slightly more, in order to protect the vulnerable,” Oyedele said.

Businesses are also beneficiaries of the reforms. The exemption threshold for corporate income tax has been raised from N25 million to N100 million in annual turnover. “If you make up to N100 million a year, you don’t need to pay corporate income tax at all. It is zero per cent,” he explained.

READ ALSO: Of envy and short memory in Ekiti politics

New reliefs have also been introduced to leave more disposable income in people’s pockets. For the first time, workers can deduct 20 per cent of their annual rent before paying tax. Pension contributions, insurance payments, and housing savings also reduce taxable income. “We are saying that people should not be overburdened. These reliefs are deliberate measures to support workers,” Oyedele noted.

Reforms to Value Added Tax (VAT) are expected to lower the cost of essential goods and services. Food, water, education, and healthcare will not attract VAT. More importantly, producers will now receive refunds on VAT incurred in production. “For example, bakers will not only sell bread tax-free, but the government will also refund the VAT they pay on sugar, flour, or fuel. That means cheaper bread for Nigerians,” he said.

Another major step has been the reduction of multiple taxation. Nigeria previously had more than 60 separate levies, ranging from bicycle tax to radio and television levies. “What this government is doing is harmonising them into a single-digit number, less than 10. That will end harassment and ease business,” he assured.

Oyedele also addressed concerns about deductions on bank deposits. “Whatever is in your bank account does not translate to taxable income. It could be a loan, a gift, or money held for someone. The law is clear: you declare your income yourself. Government only validates intelligence. Gifts will not be taxed,” he explained.

Nigerians, he added, will now be entitled to faster refunds. “If you are owed VAT refunds, the government must pay you back within 30 days. That is your money. But if you make false claims, you pay a 200 per cent penalty. This rewards honesty and punishes evasion,” he said.

On the petroleum tax surcharge being debated, Oyedele clarified that it was not introduced by the Tinubu administration. “This surcharge was introduced in 2007. At that time, it wasn’t implemented because the government was subsidising as well. While we were doing this reform, it wasn’t even in the original proposal. But in the process of working on the bills, it was agreed that we shouldn’t have different agencies collecting taxes. The law mandated FERMA to collect it—40 per cent for federal roads, 60 per cent for states. But it was never implemented,” he said.

He stressed that the current government had only ensured the surcharge was properly captured in law for transparency and orderly implementation, not that it would be immediately imposed.

According to him, the Tinubu administration has reduced the tax burden on Nigerians by protecting low-income earners, granting relief to workers, exempting small businesses, harmonising levies, and ensuring lower prices of food and essentials through VAT reform.

“This government is not introducing new taxes. It is simplifying, harmonising, and reducing burdens. About 97 to 98 per cent of Nigerians will either pay no tax or less tax under the new law. The goal is to grow businesses, protect workers, and expand prosperity,” Oyedele assured.

September 10, 2025
Tax reform bill’ll curb poverty, empower Nigerians – Presidency

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, says the Tax Reform Bill will curb poverty and empower ordinary Nigerians.

Oyedele made this known at the Spokespersons’ Summit, organised by the Nigerian Institute of Public Relations (NIPR) in Abuja.

He expressed strong optimism about the sweeping changes the bill would bring, especially for the low-income earners and small businesses across the country.

The chairman said that key highlights of the reform included the exemption of low-income earners from paying the Personal Income Tax (PAYE) and the removal of VAT from basic essentials such as food, education, and healthcare.

Oyedele added that it included a zero per cent Corporate Income Tax (CIT) rate for small businesses, adding that the bill had great benefits, especially for the masses, although it was welcomed with misconceptions and attacks.

He said, “This is because the issues of tax and taxation are not the most attractive to the ordinary persons because it is hard to part with your money.

“It is even harder when you part with your money and you cannot tell what exactly government is using it for that benefits you.”

Oyedele said the approach for the reform was to try and understand what the issues were and where the problems were coming from.

He added, “Then we will use data to engage with the people and design a solution for Nigeria that is made by Nigerians for the Nigerian people.

“That is exactly what we have done with the tax reform bill which is now nearing passage for the President to sign.”

According to Oyedele, the government is positive that as soon as implementation begins, Nigerians will see the real positive impact on their day-to-day living including low income earners being exempted from taxes.

“This is because, we want Nigerians to be able to create wealth and become successful, when they make it big time, then they will pay taxes, not the other way round.

“So, we believe that this message is resonating with the Nigerian people, it is still a long way to go but we are happy to continue with the journey,” he said.

Oyedele commended NIPR for putting the summit together and for discussing issues of government policies for the clearer understanding of Nigerians.

The President and Chairman of Council, NIPR, Dr Ike Neliaku, said the communication ecosystem should always be considered when formulating any government policy.

Neliaku said this was because the communicators have the gift of communicating even the most difficult policies to the people.

He added that they would look at such policies and guide strategic communication, adding, “which is the when,what,how where which it answers all those questions.

“So, when you say this is what we want to do,how best should we do it?it is the work of the experts and not quacks, those trained to come up with the strategies to communicate that.

“The tax reform is what this nation needs at this point but it was essentially misunderstood because of the way it was introduced and the mischief makers took advantage of that to do what they want.”

Read Also: Senator: tax reform, commission bills will spur growth

Neliaku said that was why NIPR and its partners in the communication ecosystem had promised to work with the government to develop a tax communication framework.

He said that it was also being done in the areas of climate action, Science communication and across many sectors to communicate reforms so that the child is not killed even before it is birthed.

He encouraged spokespersons to acquire knowledge, understand trends and issues in order to be effective and to speak well and informed.

Dr Nkechi Ali-Balogu, a Fellow of NIPR, said that there was need to view taxation with the gender lens, adding that there was need to make exemptions for women.

Ali-Balogun said that most women were bread winners these days as well as single mothers should enjoy tax exemption to empower them to provide for their families.

She commended NIPR for organising the summit, adding that it had broadened her horizon on national issues.

(NAN)

April 17, 2025
How states can boost tax revenue, by Oyedele

State should target the wealthiest 10 per cent of the Nigerian population to widen their tax nets, the Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele, has counseled.

He decried the focus by the state government on the poor majority for tax implementation instead of the high net-worth Nigerians.

Speaking with reporters in Abuja at the weekend, Oyedele said: “Virtually, every state in Nigeria is chasing the bottom 90 percent to collect taxes. They are allowing the top 10 percent to have a field day.”

He insisted that the issue of poor tax administration in the country lies with governments failing to collect taxes from high-income earners, which the ongoing Tax Reform Bills seek to address.

Highlighting the revenue generated from personal income tax (PIT), Oyedele said in 2023, the total PIT collected nationwide amounted to N1.5 trillion.

The Tax Reform panel chair, who compared the figure to the N10 trillion generated from the removal of fuel subsidies and foreign exchange (FX) subsidies, noted that the substantial revenue comes from the same Nigerians who now face financial difficulties.

He said: “Even if we declare a tax-free year for personal income tax in Nigeria, every state will still be financially well-off. Do you know why? It means we would forgo N1.5 trillion from PIT, but we are already generating N10 trillion into the federation account from subsidy removal and naira floatation. So, the reforms should be viewed holistically, not just one line of revenue.”

On supporting small businesses, Oyedele announced that the Reform Bills propose to raise the tax exemption threshold for businesses from N25 million to N50 million in annual turnover.

Read Also: Lagos, stakeholders discuss new ways to boost tax revenue

“This move aims to ease the tax burden on small enterprises, allowing them to grow and contribute more sustainably to the economy”, he said.

Regarding Value Added Tax (VAT), Oyedele noted that three per cent of taxpayers account for 97 per cent of the VAT revenue in the country.

He listed MTN, Dangote, Access Bank, Transcorp Hotel and large corporations, as some of the top taxpayers in the land.

According to him, small businesses rarely pay VAT and even when they collect it, they often do not remit it.

Oyedele said: “These top companies are paying VAT today, and they have the capacity to comply with our proposals. The issue is that most of their VAT contributions are credited to Lagos State because their headquarters are located there, while oil companies contribute VAT to Rivers State.

“We propose that VAT collected by these large corporations should be credited to the states where their customers consume their goods and services, not just where their headquarters are based.”

He added that this reallocation of VAT would benefit states, with an additional incentive for them to encourage formalisation.

“As more businesses enter the formal economy, states will see incremental revenue, the tax reform committee chair explained.

Noting the significant revenue potential at the subnational level, Oyedele said that 85 per cent of major revenue sources belong to the state and local governments.

These, he said, include personal income tax, property tax, stamp duties, and VAT (excluding the Federal Capital Territory).

Corporate income tax, customs duties, and petroleum revenues are shared among the federal, state and local governments, with the subnational governments receiving the largest share, he said.

“FAAC (Federation Account Allocation Committee) is not federal allocation; it is federation revenue that belongs to all tiers of government. Responsibilities and revenues should match,” Oyedele stated.

He pointed out that the PIT accounts for less than 10 per cent of Nigeria’s total tax revenue, compared to a global average of 30 per cent.

“Therefore, state governments must address issues such as multiple taxation and the proliferation of taxing agencies to create a more efficient and fair tax system,” he said.

The proposed tax reforms, Oyedele said, are designed to stimulate economic growth, improve competitiveness, and ensure shared prosperity.

For businesses, the reforms will reduce business risks, lower tax rates, and provide tax refunds.

They will also enhance the ability of companies to deduct interest expenses, benefit from input VAT credits, and receive tax relief and economic development incentives.

Households will benefit from economic relief measures, lower tax burdens, and exemptions for low-income earners.

The reforms will also reduce VAT rates for the masses and introduce zero rates on essential goods and services. It will also encourage the growth of small businesses and startups, promote remote jobs, and ensure fair taxation of investment income.

For the government, the reforms will enhance macroeconomic stability, boost revenue mobilization, and improve the tax-to-GDP ratio.

By raising its credit rating and lowering the cost of debt, the government will create a healthier fiscal balance, ensuring sustainable economic growth for the nation.

Oyedele stressed that optimising revenue collection across all levels of government is crucial for Nigeria’s economic development.

By shifting the focus away from taxing low income earners and struggling businesses, the government can generate more revenue while reducing the financial burden on the poor and small businesses.

February 24, 2025
Tax reforms: 90% of workers to pay lower taxes

Chairman, Presidential Advisory Committee on Fiscal Policy and Tax Reform, Taiwo Oyedele, has clarified that contrary to speculations, individuals earning about N1.7 million or less per month will pay lower Pay As You Earn (PAYE) tax under the proposed Tax Amendment Bills before the National Assembly. Besides, workers earning the new minimum wage and slightly more will also be fully exempted from tax obligations.

Addressing various tax issues on X, formerly Twitter, Oyedele said these thresholds will result in over 90 per cent of workers in the public and private sectors paying lower taxes while high income earners will pay slightly more in a progressive manner up to 25 per cent for the ultra-high net worth individuals.

His explanation came against the backdrop of general concerns that workers might pay more under the proposed tax reform initiatives of the federal government.

According to him, planned changes to the current tax table of personal income brackets and rates was to discourage arbitrage in some cases between the two income tax regimes.

Read Also: 2025: Pivotal year for Tinubu, Nigeria

He said the current tax table was introduced in 2011, stating that due to high inflation and lack of review, the structure has resulted in “fiscal drag” where many low income earners have been pushed to the top tax bracket over time.

This, he said, meant that an individual earning just N400,000 a month was paying the same top marginal income tax rate as a wealthy individual earning about N20 million per month.

“Therefore, the tax table has become regressive rather than progressive, as it was originally designed.

“Also, the current personal income tax regime does not encourage formalisation given that the effective top tax rate on companies is nearly double that of enterprises, which also encourages arbitrage in some cases between the two income tax regimes.

“Hence, the proposed changes seek to address these issues and simplify the system by incorporating current reliefs and allowances into the bands and rates to achieve an overall lower effective tax rate for the majority of workers,” Oyedele said.

Further addressing concerns over taxation of workers’ income in the proposed regulation, he clarified that apart from the N800,000 per annum, which was exempted from tax, there was a rent relief of up to N200,000 per annum, which together will exempt individuals earning up to N1 million per annum (about N83,000 per month).

He said: “This is particularly beneficial to low income earners. Also, the new tax bands and rates have been designed to avoid a situation where individuals earning slightly more than the exemption threshold are taxed to an extent that makes them worse off than a person whose income is within the exemption threshold.

“For example, a person earning N30,000 per month is exempt from tax while a person earning N30,001 per month will pay about N500 leaving the latter with a net of N29,500 which is N500 worse than the person earning N30,000.

“Under the tax bills, this problem has been addressed, as everyone will be eligible to the first tax-free bracket.”

He also revealed that statutory deductions, including pension and National Housing Fund contributions, were still applicable under the new tax bills.

According to him, “These are contributions under the National Housing Fund, National Health Insurance Scheme, Pension Reform Act, interest on loans for developing an owner-occupied residential house, annuity or premium paid for life insurance, and rent relief up to N200,000 per annum.”

He said while part of the objectives of tax reforms was simplification, the impact of the Consolidated Relief Allowance (CRA) and Personal Relief had been incorporated into the tax table such that the overall goal of exempting low income earners and reducing taxes for middle income earners was achieved.

Addressing worries over the removal of CRA and personal relief, which seemingly amounted to giving a relief with one hand and taking it back with the other, Oyedele pointed out, “By integrating the reliefs into the tax brackets and rates, many taxpayers with basic education would be able to calculate their taxes with little or no assistance thereby achieving the dual objectives of lower tax burden and tax simplification.”

On suggestions that the tax rate for the second band seemed quite steep, moving from zero per cent to 15 per cent, he said, “By comparison, the second band under the bills, which is to be taxed at 15 per cent, is currently being taxed at a marginal rate of 21 per cent even after all reliefs and allowances.

“So, while the 15 per cent may appear steep from zero per cent for the first band, it is lower compared to the current tax table.

“The real impact for a person earning about N3 million per annum equivalent to the aggregate of the first and second brackets is a lower effective tax rate of 10 per cent compared to about 12 per cent under the current tax table.”

January 1, 2025
No consultants for tax collection under new tax bills, Oyedele clarifies

The chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has revealed that the tax reform bills currently before the National Assembly has no provision that permits the engagement of consultants for tax assessment or collection duties.

This clarification came amid public inquiries regarding the scope and implications of the proposed legislative reforms.

Oyedele stated: “There is no provision in the tax bills seeking to introduce consultants for tax collection. In fact, section 19(3) of the Nigeria Revenue Service (Establishment) Bill specifically prohibits the engagement of consultants for the assessment or collection of taxes on behalf of the tax authority.”

The Nigeria Revenue Service (Establishment) Bill, he said empowers the Revenue Service to appoint and employ consultants, accountants, and other professionals or agents when necessary to support its operations. However, Oyedele stressed that their roles are strictly defined.

“Such consultants shall not carry out the duties of assessment or collection of tax, tax compliance or enforcement activities, or routine responsibilities of tax officials,” he added. This ensures that tax administration remains a core function of the government, maintaining accountability and avoiding potential conflicts of interest.

Responding to questions about section 69 of the Nigeria Tax Administration Bill, which allows tax authorities to use technology and third-party platforms for tax collection, Oyedele explained that this is not a new concept.

“The provision currently exists under section 25 of the FIRS Establishment Act 2007, as amended by the Finance Act of 2021,” he noted. The retained provision seeks to enable tax authorities to automate processes and facilitate tax compliance.

“The necessary applications and payment solutions may be developed by the relevant tax authority or procured from third parties. This is a common practice globally for tax administration, and in principle, it is not different from the way a public or private sector organisation such as banks and online stores use third-party applications for payments,” he said.

To address concerns about governance and transparency in the use of third-party applications, Oyedele pointed out the inclusion of comprehensive oversight mechanisms in the tax bills.

“The First Schedule to the Nigeria Revenue Service (Establishment) Bill sets out a governance framework for the activities of the tax authority, including measures to prevent conflicts of interest. Additionally, section 26 requires the tax authority to submit periodic reports of its activities, including audited accounts, to the Minister of Finance,” Oyedele explained.

The minister, in turn, is mandated to present these reports to the Federal Executive Council and the National Assembly. These measures are designed to ensure that the adoption of technology in tax administration is carried out with accountability and efficiency.

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Oyedele noted that these reforms align Nigeria’s tax administration practices with global standards. The deployment of technology for tax administration is expected to improve efficiency, reduce human intervention, and promote seamless interactions between taxpayers and tax authorities.

The proposed tax bills represent a significant step toward modernizing Nigeria’s tax system. By clearly defining the roles of consultants and leveraging technology within a robust governance framework, the reforms aim to enhance transparency, efficiency, and compliance, aligning with international best practices.

As stakeholders continue to examine the bills, Oyedele’s remarks serve to dispel misconceptions and highlight the government’s commitment to accountability and technological advancement in tax administration.

December 8, 2024
Tax Reform: We consulted state governors, other stakeholders, says Taiwo Oyedele

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said on Monday, November 18, that the Committee consulted the Nigeria Governors Forum, the Nigeria Economic Council, Civil Society Organizations, and a wide range of Nigerians before arriving at tax reform bills currently before the National Assembly.

Oyedele, who spoke at an interactive session on the tax reform bill organised by the House of Representatives, also explained the idea of increasing the derivation was to give all states equal and fair opportunity and not to give any state any advantage.

He explained that the bills were not aimed to undermine any region of the country, adding that the current VAT policy requires all companies to pay VAT from their headquarters which he said confer undue advantage on some states.

He said the Presidential Committee interfaces with all shades of Nigerians, adding that the committee received submissions from all the 36 states of the Federation and the Federal Capital.

At the end of a meeting of the National Economic Council, governors of the state had asked the President to withdraw the tax reform bills to allow for more consultation in the interest of the while leaders of three North also kicked against the passage of the bills by the National Assembly.

He said one of the proposed laws aimed to bring all tax laws into one while harmonising all the taxes which he argued has stunted the growth of the nation’s economy.

Speaking specifically on the payment and sharing of VAT resources, he explained that currently, under Section 40 of the current VAT Act law, VAT revenue is allocated 15 percent to the Federal Government, 50 percent to the States and FCT, and 35 percent to Local Governments

He said further that the proposed law seeking a reduction of the federal government’s share of VAT while proposing that companies paying VAT should now make their return based on where the services being taxed were carried out.

He said: “For example, the current law requires that MTN makes its VAT return from its head office in Lagos. But what we are proposing is that such a return should be made based on the location where the calls were made. That will allow smooth computation of the derivation. “

He said further that the various states believe that VAT should be collected by them which explains why states like Lagos and Rovers have enacted their own VAT laws, saying the VAT policy cannot work well if the states are allowed to collect VAT.

Oyedele said currently, Nigeria has eight sources of revenue which include “Personal Income Tax, property tax, stamp duties, value added tax and land. These five are mostly being collected by states while the other three are shared among federal, state, and local governments. These are corporate income tax, customs duties, and petroleum and solid minerals revenue.

“The sad news is that every single one of these eight is significantly underperforming, while the good news is that every single one of those eight is yet an opportunity to change the narrative”.

He explained that the nation’s budget was very small while expressing regret that the country could not raise enough money to finance its small budget despite its size.

He said: “Our budget is small. What is even smaller is our revenue. The entire revenue that was generated in 2023 is about N17.5 trillion which is less than 20 billion dollars. What that means is that our small budget is financed by borrowing because we cannot even raise enough money to finance a small budget.

“The truth is that the 36 states and FCT collected N1.6 trillion as personal income tax in 2023, while South Africa collected about 50.5 trillion naira equivalent of personal income tax that same year. What South Africa collected as personal income tax in one year alone is more than our entire revenue multiplied by two.

“Even Kenya which is a small country compared to Nigeria generated 5.8 trillion naira in personal income tax alone, which is almost four times what Nigeria collected, yet our population is four times the size of their population.

“In 2023, Nigeria collected N3.2 trillion from Customs. In that same year, Kenya collected 8.9 trillion naira. If you look at the value of what we import and what Kenya imports, they imported 23 billion dollars worth of imports, while Nigeria imported 66 billion dollars worth of imports.

“We imported almost three times what Kenya imported and collected one-third of what Kenya collected. Something is not adding up and we must fix those problems if we must move forward as a country.

“The tax system lacks proper structure. We have obsolete laws which we are still amending. We have laws, but we are not respecting the laws.

“We have about 60 official tax laws which we have approved in Nigeria as a country. What other countries have approved is less than 10. The solution to our problems can never be to keep introducing new taxes. Rather, it is to get rid of the multiple taxes and maximise collection. As high as the number is, the unofficial ones are even more.

“First, we want to do away with those taxes that yield low income because they place a lot of burden on poor people and small businesses. Secondly, is to focus on high revenue-yielding taxes that are broad-based and easy to collect. We want a situation where we are able to institutionalise these reforms so that it will be difficult for anybody to undo them”.

The tax reform, he said further “It is also to ensure simplicity to ensure global best practice. This bill, the Nigeria Tax Bill is trying to help us bring all our tax laws into one book so that you can just go to that tax law and find the taxes you need to pay

“We have recommended payment of tax by companies that make losses. The way the law is made today, you are making the companies pay tax on their capital and that is the fastest way to kill a business.

“We proposed that there should be an income from where you get capital gain tax. This will address the abuse of the tax regime. Reduce company income tax from 30 to 25 percent

“We also have a proposal to collapse all taxes into one single tax called development levy from where the money will now be distributed to the other agencies that we feel need that revenue. We feel that over time, all agencies of government should be funded from the budget. We don’t think any agency should be collecting their own taxes and running their government.

“The current system of VAT imposes a tax on basic consumption. A lot of the food you buy in Nigeria today has hidden VAT. We are proposing a 0 VAT on food. 82 percent of the income of Nigerians is spent on food, education, and health care. So, why should you be taxing the basic things that Nigerians need to survive?

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“A lot of states have consumption tax written in different names. We are proposing that the VAT system should be allowed to work and let everybody discontinue every other form of consumption tax in the interest of our people.

“Nigeria is running on a low budget. For 2024, the budget of the federal government, including the supplementary appropriation which added about N6 trillion, the budget came to about N35 trillion, while all the states combined was N15 trillion and if you add the entire budget of Nigeria, it comes to about N51.1 trillion.

“If you convert that, it comes up to about 13 billion dollars which is equivalent to the budget of Kenya with about 54 million people and less than one quarter of the budget of South Africa. The South African budget for 2024 is equivalent to 150 billion dollars, with a little of 60 million people.

“How come that despite our size, intellectual capacity, and population, our budget is still the same things like that of Kenya.”

November 18, 2024
Potential benefits of tax reform bills, by Oyedele

The Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele yesterday shed further light on the Federal Government’s four tax reform bills now before the National Assembly ,and said it was partly to empower Nigerian youths to play a key role in the digital economy space.

Changes to the income tax laws ,he said on his X handle @taiwooyedele,were to facilitate remote work opportunities for Nigerians in Nigeria within the global business process outsourcing.

He listed the other objectives of the tax reforms as follows:

*Zero rated VAT and other incentives to promote exports in goods, services, and intellectual property.

*Tax exemptions for small businesses with annual turnover of N50 million or less including withholding tax, value added tax, and 0% corporate income tax rate.

*Exemption from PAYE (personal income tax) for minimum wage earners and reduced tax burden for over 90% of all workers in the private and public sectors.

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*VAT at 0% for food, education, healthcare, and exemption for rent, public transportation, fuel products, and renewable energy. These items constitute an average of 82% of household consumption and nearly 100% for low income households to ameliorate the rising cost of living for the masses.

*Introduction of the Tax Ombudsman to advocate for an improved tax system and protect vulnerable taxpayers.

*Reduction of corporate income tax rate from 30% to 25% over the next 2 years and elimination of earmarked taxes on companies to be replaced with a harmonised single levy at a reduced rate.

*Elimination of minimum tax on loss-making companies and those with low profit margins.

*Grant of input VAT credit to businesses on assets and services to improve investment competitiveness and reduce the cost of goods and services.

*Redesign of the personal income tax brackets and rates, VAT and capital gains tax to be progressive while protecting the poor.

*Changes to permit the payment of taxes on foreign currency denominated transactions in naira to reduce the pressure on the exchange rate and simplify compliance for businesses.

*Proposal to repeal over 50 nuisance taxes and levies, and harmonise the remaining taxes to a single digit.

*Introduce an equitable basis for VAT revenue sharing to ensure that states without many headquarter companies are fairly treated and rewarded for their economic contributions.

*Rationalisation of tax incentives to reduce uncertainty and provide a level playing field for all investors.

*A new National Fiscal Policy to set the framework for fair taxation, responsible borrowing, and sustainable spending.

The National Economic Council (NEC) had recommended to President Bola Tinubu the withdrawal of the bills to enable wider consultation.

But the President said the bills would not be withdrawn.

He said the National Assembly should allow the generality of Nigerians make their inputs during public hearings of the bills.

November 17, 2024
Tax panel chair explains VAT sharing on basis of derivation, consumption
- DAWN urges dispassionate Bill consideration
Value Added Tax (VAT) is to be shared based on derivation and consumption, according to the proposal in the Tax Bill before the National Assembly, Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele, clarified yesterday.

He defended the proposal in the Bill, saying it will guarantee fairness and long-standing criticisms of the existing distribution formula.

Oyedele was responding to the criticism to the VAT plan in the Tax Bill by the Northern State Governors’ Forum (NSGF) and Northern Council of Traditional Rulers and Chiefs at their joint meeting in Kaduna on Monday.

Also yesterday, the Development Agenda for Western Nigeria (DAWN) Commission also rejected North’s leaders complaint.

Oyedele on his X (formally twitter) handle, said: “A state that produces food shouldn’t lose out just because its products are VAT-exempt or consumed in other states.”

Oyedele argued that VAT from services, including telecommunications, should also reflect the location of subscribers, thereby benefitting the states where goods or services originate.

Acknowledging the governors’ concerns, he said the current VAT distribution is flawed.

He added: “Currently, VAT revenue is allocated with 15 percent going to the Federal Government, 50 percent to states and the Federal Capital Territory, and 35 percent to local governments.

“Although the VAT Act does not clearly outline specific distribution details, a minimum of 20 percent of VAT revenue to states and local governments is based on derivation, while additional distribution factors include equality (50 percent) and population (30 percent).”

The Northern Governors Forum, chaired by Gombe State Governor Muhammadu Inuwa Yahaya, had complained that the proposed distribution could undermine Northern interests.

The forum urged lawmakers to oppose the tax bill and any measures perceived as detrimental to the region.

However, Oyedele called for collaboration among stakeholders, stressing that the proposed model would establish a fairer VAT distribution system that would benefit states equitably based on their contributions and needs.

DAWN hailed the proposed tax reform, saying that it would benefit the North more because of its land and population advantage.

The commission said in a statement by the Director-General, Dr Seye Oyeleye, that the reform would provide the stimulus for productive activities in states and enhance genuine economic development.

DAWN urged the National Assembly members to approach the bill from knowledge and patriotic perspectives.

According to the Commission, the North has nothing to fear because many benefits would accrue to the region in the course of distribution.

The statement reads: “A thorough analysis of the proposed reforms reveals that they present significant opportunities for sustainable development across all regions, including the North, which eventually stands to be the biggest beneficiary because it has two factors of production, land and population, in significant abundance compared to the southern states.

“The policy will strengthen the link between ‘need’ and ‘contribution.’ The concern about headquarters-based remittance, while understandable, requires deeper examination in light of current economic realities. Recent data reveals a significant disparity in VAT generation across states, with Lagos alone contributing 50.5% of the total VAT revenue.

“Other significant contributors are Rivers, Oyo, Kano and FCT (Abuja). These contributions reflect the intense economic activities in these states, which consequently attract large populations seeking economic opportunities.

These economic hub states face unique challenges that the current horizontal allocation formula does not adequately address. Their infrastructure bears the burden of serving not just their residents, but millions of Nigerians who migrate to or do business in these states.

“The current horizontal allocation formula, which returns only a fraction of generated VAT to these states, impairs their ability to maintain and expand critical infrastructure to meet these extraordinary demands. This creates a paradoxical situation where the states generating the most economic value for Nigeria struggle to maintain the very infrastructure that enables this value creation.

“The proposed reforms have strategically excluded several items from the VAT list, which will likely result in reduced VAT generation across all states, including top contributors like Lagos and FCT. This deliberate restructuring reflects a more focused approach to value-added taxation, targeting genuinely productive economic activities rather than broad-based consumption.

“This alone is an initiative worth applauding because it brings relief to the populace that the northern governors believe would be negatively impacted.

“This refinement of the VAT structure presents both a challenge and an opportunity. While initial VAT collections may decrease, the new system creates a more transparent link between economic productivity and revenue generation. The reforms focus on collecting VAT from truly value-a

“States are now encouraged to compete on the basis of economic productivity and innovation rather than static geographical or demographic factors, shifting the country’s productive gear from sharing equity to developmental equity. This aligns with global best practices in fiscal federalism and promotes sustainable economic development across all regions.

Read Also: North’s leaders reject VAT plan, okay livestock reform, security

“Rather than jeopardizing anyone’s well-being, these reforms would serve as a catalyst for enhanced development across all regions. The increased allocation to states and local governments would provide more resources for critical infrastructure, healthcare, and education – essential elements for the well-being of all Nigerians. This is not merely a regional agenda but a national imperative to ensure that all citizens have access to quality social services, regardless of their geographic location.

“The proposed reforms would enable high-contributing states to reinvest in their infrastructure, ultimately benefiting the entire nation.

“When Lagos can better maintain and expand its infrastructure, it enhances its capacity to generate even more VAT revenue, creating a positive cycle that benefits all states through increased national revenue. Similarly, as other states develop their economic potential under the new formula, they too can create such virtuous cycles of growth and development.”

“DAWN Commission calls on the National Assembly to approach this critical reform through constructive dialogue among all stakeholders. We believe these reforms, if properly implemented, will strengthen Nigeria’s fiscal framework while ensuring no region is left behind. The proposed transitional framework provides adequate time for all States to develop their economic bases, enhance their tax collection systems, and adapt to the new revenue sharing formula while maintaining essential public services. It is not a zero sum game for the high VAT-generating States, neither is it a north versus south agenda.

“It is a win-win policy to unlock Nigeria’s true economic potential. We call on all stakeholders to approach these reforms with an open mind, focusing on their long-term benefits for national development. Our shared goal remains the prosperity and well-being of all Nigerians, regardless of region or state of residence.”
October 30, 2024
Actualising the African Continental Free Trade Agreement

The drive to actualising the African Continental Free Trade Area is gaining momentum. The Access Corporation pooled economic experts, including Taiwo Oyedele and Bismarck Rewane to brainstorm on the way forward and ex-ray the benefits of the AfCFTA agenda, write Group Business Editor, SIMEON EBULU and EKAETE BASSEY.

The AfCFTA, the acronym for the African Continental Free Trade Area or Agreement, as it is variously called, is gaining traction, as it is seen as the gateway to the continent’s economic development. The initiative which is the brainchild of the African Union (AU), is being vigorously pursued by the African Export and Import Bank (Afreximbank), is to date been endorsed by over 64 countries.

The AfCFTA is seen and envisaged to provide the African Continent the needed economic bloc, which when engaged on the specified terms, will afford member countries easier access to each other’s markets, without border and regulatory constraints that hitherto act as hindrances to international trade.

Trade blocs have become common features around the world. Countries have always leveraged on geographical contiguity, communality, and other bilateral and multilateral frameworks to foster trading blocs, or associations. The USA- Canada Trade Pact, the Eurozone and NAFTA, are s few examples.

AfCFTA is coming with a lot of potentials, but challenges lay ahead. The problem of multiple currencies in use from one country to another, exchange rates disparity and near absence of internet infrastructure to enable money transfers, are a few critical minuses that can result in hiccups. Add to that the issue of raw materials processing and standardization, and not ignoring communication barriers brought about by illiteracy, and what have you.

Notwithstanding these myriads of challenges, the financiawl and banking sub-sectors are upbeat that the AfCFTA holds so much benefits for the African Continent and its economy, so much so that the inherent barriers will not be aloud to stand to becloud the benefits that the free trade area holds for the region. That account for why several dialogue and strategy sessions are being held regularly and everywhere to strategize on how to surmount the obstacles.

One of such sessions is the one hosted by Access Corporation, owners of Access Bank PLC.

To speak to the pivotal issues that are expected to drive the growth of the African Free Trade Area, Access Bank put together an assemblage of knowledge driven experts, who in their chosen fields, have proved their mettle and are schooled in the art of regional and global economic matters, that can proffer solutions to the challenges envisaged in midwifing the issues around the AfCFTA.

The African Continental Free Trade Area, as envisioned, could turn out to be one of the biggest trade blocs, given the size and resources embedded in African countries.

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It is envisaged by the promoters, that the operation and trading activities and other commercial undertakings that will take place across the region, will give rise to the establishment of industrial hobs and processing centers that will require extensive and deep funding that only banks and financial institutions with requisite balance can handle. To date, many development banks, including Afreximbank, African Development Bank (AfDB), among others, including Access Bank in Nigeria, including their counterparts in North Africa and South Africa, have developed flourishing desks designed to handle export related businesses. Many of these institutions have established foreign branches that are competing favourably with indigenous ones in the host countries.

Renowned economist, Bismarck Rewane highlighted the pivotal role of banks in Nigeria’s economic rebirth amidst significant economic reforms.

Speaking in September at the second Access Bank Forum, Rewane, CEO of Financial Derivatives Company Ltd., emphasised that the nation is at a critical juncture, requiring strategic interventions from both the financial sector and the government.

Rewane opened with a broad overview of the economic outlook for 2026, forecasting Nigeria’s growth rate at 3.5 percent, making it the second-largest economy in Sub-Saharan Africa.

He warned that while the future holds potential, the current economic landscape is fraught with challenges.

The country faces high inflation, substantial debts, and growing poverty levels, creating a daunting environment for recovery. Against this backdrop, Rewane stressed that the banking sector, particularly through institutions like Access Bank, holds a significant key to driving the recovery efforts.

“Banks are no longer just intermediaries; they are the lifeblood of economic activities in a developing economy like Nigeria,” Rewane noted.

He pointed out that with the proper regulatory framework and reforms, banks can serve as catalysts for growth by facilitating investments in critical sectors such as agriculture, telecommunications, manufacturing, and oil and gas.

One of the central points in Rewane’s presentation was the need for financial institutions to lead the charge in nation’s Accelerated Stabilisation and Advancement Plan (ASAP), designed to advance President Tinubu’s economy-related “8 Priorities.”

He explained that the banking sector’s ability to extend credit and support key government programmes will be instrumental in addressing poverty, stimulating demand, and supporting household incomes.

“The stabilisation plan is not merely about pumping money into the system,” Rewane cautioned.

“It’s about strategic interventions in sectors that drive productivity and enhance competitiveness, such as agriculture and manufacturing.”

He pointed out that banks must adopt innovative financing solutions, such as digital-only banking, partnerships with fintech companies, and support for small and medium enterprises (SMEs), to bridge the gaps in financial inclusion.

Rewane’s assessment highlighted the importance of foreign exchange stability, which remains a critical challenge for businesses in Nigeria.

He predicted that by 2026, the naira would stabilise at N1550 per dollar in the parallel market, a key factor that could encourage greater participation in the nation’s economy.

He credited the financial sector’s potential to mitigate the risks by facilitating inflows through diaspora remittances and improving access to credit for businesses, especially those in export-driven sectors.

“Investment in deep offshore drilling, green bonds, and sustainable projects can transform the oil and gas sector, but banks must lead the charge in facilitating these investments,” Rewane stated.

He stressed that banking institutions must be at the forefront of financing the next wave of infrastructure development, including power generation, transportation networks, and renewable energy projects, to unlock Nigeria’s economic potential.

Looking ahead, Rewane projected that the banking sector’s performance would grow substantially, with sector growth expected to reach 38.45 per cent by 2026.

However, he warned that the sector faces risks such as regulatory fragmentation, high credit risks, and non-performing loans (NPLs).

To overcome these challenges, Rewane called for the recapitalisation of banks (which is ongoing), and the consolidation of the financial industry to build a more resilient system.

In conclusion, Rewane’s message at the Access Bank Forum was clear: banks will play an indispensable role in Nigeria’s economic rebirth.

He urged financial institutions to step up their efforts, not just by lending, but by becoming key partners in the country’s stabilisation efforts.

“By supporting growth across industries, enhancing access to capital, and fostering financial inclusion, banks like Access Bank can help steer Nigeria toward a brighter economic future,” he added.

Also speaking at the session, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, laid out an urgent and comprehensive agenda to address the country’s fiscal and economic challenges.

In the face of Nigeria’s pressing socio-economic challenges including slow economic growth, high inflation among others, Oyedele, during the 2024 Access Corporate Forum on “Sustainable Economic Growth”, argued that bold reforms, particularly in fiscal governance, tax collection, and public spending, are imperative to reverse these trends and promote shared prosperity.

Present Economic Realities

He acknowledged Nigeria’s harsh economic landscape, characterised by a GDP growth of approximately 2 percent annually over the past decade, well below the population growth rate.

“Over 95 million Nigerians live in monetary poverty, with an even larger 133 million people suffering from multidimensional poverty,” Oyedele highlighted.

He also pointed to Nigeria’s growing debt, with debt service reaching 96 percent of government revenue in 2022 and 74 percent in 2023.

This fiscal strain, he noted, is compounded by declining foreign investments and capital formation, alongside a worrying trend of emigration and corporate divestment.

Public Expenditure and Revenue Shortfalls

In his analysis of public expenditure, Oyedele underscored the 2024 Aggregate Budget for both the Federal Government and states at N51.1 trillion (circa US$32 billion).

However, this is dwarfed by the revenue shortfall, driven by Nigeria’s low tax revenue profile compared to countries like Kenya and South Africa.

Despite having a wide tax base, inefficiencies in collection and compliance mean that “Nigeria cannot afford to continue business as usual. Incremental progress is simply not enough,” Oyedele stressed.

He highlighted a multiplicity of taxes and taxing agencies across all levels of government, complicating compliance and frustrating taxpayers.

Why Tax Revenues are Low

A key factor behind the country’s low tax revenues is poor tax morale, Oyedele argued.

He cited findings from a recent NESG Tax Perception Survey, revealing that only 17 percent of individuals and 31 percent of businesses consider tax evasion wrong. The survey indicated “Nigerians have low tax morale – most people don’t pay the correct tax to the government and they do not think that evasion is wrong.”

Tax Morale is the willingness to comply with taxes and the belief that tax evasion is wrong according to NESG.

“There is a significant lack of trust in the government, dissatisfaction with social services, and a highly complex tax process, which discourages compliance,” he explained.

The survey also highlighted that Nigerians prioritise basic needs like electricity and security over tax compliance.

Reforms to Harmonise Taxes

To remedy these systemic issues, Oyedele proposes tax harmonisation as a cornerstone of fiscal reform. The goal is to simplify Nigeria’s tax structure by reducing the number of taxes across all levels of government to a single digit.

“We must eliminate nuisance taxes with low revenue yield and high collection costs, which ultimately burden the poor and small businesses,” he said.

Oyedele envisions a system that focuses on a few, broad-based taxes that are easier to collect, including income tax, value-added tax (VAT), property tax, customs duties, excise taxes, and stamp duties. Additionally, he called for a national single revenue platform to streamline the collection process.

2024 National Fiscal Policy and Proposed VAT Reforms

The committee’s 2024 National Fiscal Policy emphasises equity, simplicity, and transparency. Oyedele advocates for tax reforms that lower the burden on essential goods while increasing rates on non-essential luxury items.

“The current VAT regime taxes essential items that account for 82 percent of the consumption of low-income households. We are proposing 0 percent VAT on food, healthcare, and education,” Oyedele outlined.

Furthermore, the reforms aim to exempt 97 percent of small businesses from charging VAT, reduce audit processes for VAT refunds, and ensure equitable sharing of VAT revenues among states.

Constitutional Amendments and Long-Term Goals

Oyedele’s vision extends beyond immediate fiscal adjustments. He proposes significant constitutional amendments, including the establishment of a Federal Revenue Court and a cap on the number of taxes imposed by different government tiers.

These amendments, according to Oyedele, are vital for ensuring long-term fiscal discipline and transparency.

“Reforms must be institutionalised to ensure sustainability,” he added, stressing the importance of embedding these changes within Nigeria’s legal and governance framework.

Facilitating Shared Prosperity

According to the Chairman, Presidential Fiscal Policy and Tax Reforms Committee, at heart of the center of the reform agenda is the need to facilitate shared prosperity and sustainable growth.

The committee’s mandate, he indicated, focuses on protecting the poor, harmonising taxes, digitising revenue systems, and promoting fiscal federalism.

The ultimate goal, Oyedele reiterated, is “to promote inclusive growth by removing bottlenecks and disincentives that hinder investment and economic progress. We aim to ensure that Nigeria’s fiscal policy is purposeful, coherent, and investment-friendly.”

He reaffirmed that these reforms present a bold and necessary blueprint for restoring fiscal balance, fostering shared prosperity, and positioning the country on a path to sustainable growth.

October 17, 2024