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Tag: tax reform Bills

  • Tax Reform Bills: FG raises tax exemption threshold for SMEs to N50m

    Tax Reform Bills: FG raises tax exemption threshold for SMEs to N50m

    The federal government has announced an increase in the tax exemption threshold for Small and Medium enterprises (SMEs) from ₦25 million to ₦50 million in annual turnover, highlighting the significant benefits of the Tax reform bills for small businesses.

    According to a statement signed by the management of the Small and Medium Enterprises Agency of Nigeria (SMEDAN), Director General Charles Odii will embark on a sensitization tour to engage Small Business Owners nationwide on the implications and opportunities of the proposed Tax Reform Bills.

    This exercise builds on earlier efforts that contributed to the drafting and submission of the Bills. The objective is to provide clarity, dispel misconceptions, and foster a better understanding among key stakeholders, including local administrators.

    The engagement will kick off with a breakfast meeting in Lagos, featuring representatives from Business Membership Organizations (BMOs) and other associations. Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, will lead a key session during the meeting.

    “We want SMEs to fully understand the implications of these Bills and be adequately represented in the ongoing legislative process. Our priority is for SMEs to reap its full benefits, which will ultimately boost the economy, given that they are the engine of growth.

    “Proposals such as the consolidation of taxes, elimination of nuisance levies, expansion of exemptions, and zero VAT on exports and essential goods reflect the true wishes of SMEs as identified during previous engagements and surveys,” Odii emphasized.

    Read Also: Tax reform bills to end multiple taxation, benefit low-income earners – NOA DG

    Odii further stressed the importance of understanding enforcement mechanisms, adding that SMEs need to understand what enforcement would look like if the Bills are passed, to ensure they are not denied the benefits intended for them.

    With over 90% of businesses in the country and more than 80% of employment dependent on SMEs, it is crucial to eliminate arbitrary taxes that increase operational costs, as proposed by the Bills, to ensure SMEs can hold relevant authorities accountable for proper implementation.

    The DG said the engagement sessions would help dispel misinformation and fear-mongering surrounding the Bills, ensuring productive and informed discussions. He commended the Presidential Fiscal Policy and Tax Reforms Committee for its commitment to dialogue and prioritizing SMEs, which drive growth and prosperity.

  • Fiscal Responsibility Commission endorses tax reform bills as equitable, transformative

    Fiscal Responsibility Commission endorses tax reform bills as equitable, transformative

    The Fiscal Responsibility Commission (FRC) has thrown its support behind the Tax Reform Bills currently under consideration by the National Assembly.

    The commission believes that the tax reform bills have the potential to enhance fiscal governance and boost economic growth.

    Victor Muruako, chairman of the commission, shared this during an interaction with academics and journalists at the Fellowship Lecture and Investiture Ceremony of the Capital Market Academics of Nigeria (CMAN) held on December 9, 2024, at the NDIC Academy, Abuja.

    Muruako revealed that a critical analysis conducted by the FRC shows the proposed reforms do not favour any specific region or group. Instead, they promote a fairer distribution of resources among Nigeria’s federating states.

    “The bills are designed to benefit all Nigerians, particularly low-income earners and Micro, Small, and Medium Businesses (MSMBs),” he stated.

    The bills, developed by the Presidential Fiscal Policy and Tax Reforms Committee, include provisions to: provide Tax Relief for Low-Income Earners: Individuals earning less than N1.7 million annually will see a reduction in income tax; reduce Tax Burden on Small Businesses: Companies with turnovers below N50 million will be exempted from taxes, benefiting over 90% of small businesses; simplify the Tax System: The number of taxes and levies will be reduced, streamlining tax administration; increase Revenue for Subnational Governments: States and local governments will receive a larger share of VAT revenue, enhancing public service delivery and improve Ease of Doing Business: The reforms aim to reduce compliance burdens for businesses and make the tax system more user-friendly.

    Muruako highlighted the broader economic implications of these reforms. He noted that tax relief for low-income earners could boost household savings and investments, thereby driving sustainable economic growth. Similarly, easing the tax burden on MSMBs would allow them to grow organically, contributing to a rise in Nigeria’s GDP over time.

    Read Also: Tax reform bills to end multiple taxation, benefit low-income earners – NOA DG

    Responding to controversies surrounding the bills, Muruako commended President Bola Ahmed Tinubu for fostering dialogue, describing him as a Democrat. He urged stakeholders from all geopolitical zones to support the reforms, emphasizing their transformative potential for Nigeria’s fiscal and economic landscape.

    “The reforms are not just about increasing government revenue—they are about creating an enabling environment for businesses, reducing poverty, and ensuring equitable resource distribution,” Muruako stated.

    With these reforms, the federal government aims to redefine Nigeria’s tax architecture, making it fairer, more efficient, and better aligned with the nation’s development goals.

  • Tax reform bills to end multiple taxation, benefit low-income earners – NOA DG

    Tax reform bills to end multiple taxation, benefit low-income earners – NOA DG

    Director-General of National Orientation Agency (NOA), Malam Lanre Issa-Onilu, on Tuesday, said that the proposed tax reform bills would eliminate multiple taxation and favour low-income earners in the country.

    Issa-Onilu stated this during a road show on nationwide sensitisation on security awareness and campaign against get-rich- quick syndrome and tax reform bills.

    The News Agency of Nigeria (NAN) reports that the road show, which commenced from Obasanjo complex through Sabon-Gari, terminated at NOA office on Ladi-Kwali IBB Way in Minna.

    NAN also reports that the theme of the road show was: “Creating Awareness, Ethical Value and National Development.”

    Issa-Onilu, represented by the agency’s Assistant Director, Finance and Account, Mrs Onuoha Uchenna, said the bills aimed to reduce the burden of tax payments on low-income earners.

    “The benefits of the tax reforms include no multiple payments of tax. It will be based on the money you make, and it will lessen the burden of tax payments on low-income earners,” he said.

    The director-general urged Nigerians to understand the benefits of the tax reforms and not be afraid of the bills, as they were designed to benefit the less-privileged.

    Also speaking, the NOA Director in Niger, Malam Yahaya Gbongbo, said that the agency’s goal was to educate citizens on five key government programmes and policies.

    Read Also: Southeast Senate caucus to consult on Tax Reform Bills

    Gbongbo listed the issues to include: World HIV/AIDS Day, security awareness, discouraging get-rich-quick syndrome, World Human Rights Day and tax reform bills.

    “We want Nigerians to understand the contents of these bills, bring their inputs and make amendments for standard bills acceptable to all,” he said.

    The director called on Nigerians to read and get acquainted with the tax reform bills, adding that with the bills, there would be no more multiple payments of tax, thus making it easier for individuals and businesses.

    According to him, the bills will be a relief, as they exempt low-income earners from tax, ensuring they keep more of their hard-earned money.

    Gbongbo said that the reform would also make the tax system more straightforward by reducing confusion and complexity.

    (NAN) 

  • Southeast Senate caucus backs Tinubu’s Tax Reform Bills

    Southeast Senate caucus backs Tinubu’s Tax Reform Bills

    …promise to engage in wider consultation

    The southeast caucus of the Senate on Monday, December 9, supported the Tax Reform Bills before both chambers of the National Assembly.

    He said senators from the southeast zone would consult widely to get the input of their constituents and critical stakeholders in the towards the consideration and passage of the Bills.

    The leader of the southeast caucus in the Senate, Senator Enyinnaya Abaribe (APGA-Abia South), disclosed this to reporters after a closed door meeting of the caucus held in his office in Abuja. 

    Abaribe, during the media briefing, said Senators from the southeast, are not against the bills but want wider consultation to be carried out on them before they are considered by both chambers of the National Assembly.

    Read Also: 50 ways Nigerians can benefit from Tax Reforms  

    “As much as the entire Senators from South East, are not against the Tax Reform Bills before both chambers of the National Assembly for consideration, we want wider consultations to be carried out on them.

    “Specifically, we need to consult with our constituents across the 15 Senatorial Districts in the Zone, with our state governments and other critical stakeholders.

    “We have read through the bills and want to share our knowledge with other stakeholders from the South East Zone for a more equitable framework in the bills that would eventually be passed.

    “We are not against the bills but need to consult with our people,” he stressed

    Recall that the Tax Reforms Bills which comprise the Nigeria Tax Bill 2024,  Nigeria Tax Administration Bill 2024, Joint Revenue Board of Nigeria (Establishment) Bill, 2024 and the Nigeria Revenue Service (Establishment) Bill, 2024; have generated controversies in the polity since October 3, 2024, when President Bola Tinubu, forwarded them to both the Senate and the House of Representatives for consideration.

    While the Presidency, the South-South caucus in the Senate, are calling for immediate consideration of the bills, other stakeholders in the polity, like the Nigerian  Governors’ Forum, Northern Senators, Arewa Consultative Forum etc, are seeking wider consultations on Bills.

  • You can’t shut down tax reform bills, ex-Niger gov Aliyu tells critics

    You can’t shut down tax reform bills, ex-Niger gov Aliyu tells critics

    Former chairman of the Northern Governors’ Forum, Babangida Aliyu, has criticized opposition to the proposed tax reform bills, asserting that they cannot be dismissed based on “warped perceptions.”

    Speaking over the weekend, Aliyu faulted Nigerians who oppose the reforms without thoroughly studying their content.

    Aliyu, who berated the federal government for not communicating the content of the bills properly to Nigerians, said the citizens needed to understand that no policy benefits everyone equally.

    Four bills, including the Joint Revenue Board of Nigeria (Establishment) Bill, 2024, the Nigeria Revenue Service (Establishment) Bill, 2024, and the Nigeria Tax Bill, 2024, have sparked nationwide debate since their introduction to the National Assembly.

    At a meeting on October 28, governors of the 19 northern states under the platform of the Northern Governors Forum had rejected the new derivation-based model for Value Added Tax distribution outlined in the tax reform bills.

    Days later, the National Economic Council called for the bills’ withdrawal, urging the president to allow more consultations.

    Essentially, opposition against the bill has been from northern Nigeria.

    Those agitating had said sections of the bill are against their cultural heritages, reduction of internally generated revenue for the states, Value Added Tax (VAT) imbalance, impoverishment of the poor and wrong timing.

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    Amidst several backlashes, President Bola Ahmed Tinubu had called for further dialogue between the executive and legislative.

    But speaking at the graduation ceremony at the National Institute for Security Studies, Abuja, for the Executive Intelligence Management Course 17, Aliyu wondered why some Nigerians were resistant to the reform.

    He said: “I was speaking to the NSA when we were in the common room, and I said to him, look, many of the people debating the tax bills have not read them.

    “But again, there is the problem of communication, the government should speak more. When the majority of the people are not literate, you should be the first to speak on any major policy, particularly a policy that will bring changes, so, that the people can understand.

    “You cannot say because of one person, the policy cannot be taken. So communication is very, very important,” he added.

    Speaking at the event, Vice President Kashim Shettima highlighted the evolving nature of global threats, including cyber warfare and disinformation, calling for innovative responses and a redefinition of security paradigms.

    Shettima, who was represented by the Minister of Federal Capital Territory, Nyesom Wike, also stressed that technology must serve as a tool for progress, not a weapon of destruction

    The security issues we face—from terrorism and transnational crime to climate migration and cyber warfare—transcend borders.

    “Your journey through this institution has equipped you not only to defend but to build alliances that honour our shared humanity. Learning is the gateway to finding lasting solutions to complex problems.

    “Our world shrinks every day, and no challenge in one nation can be isolated from others. The social and economic tensions we must douse as leaders cannot be addressed with archaic ideas,” he added

    He urged the graduands to transform crises into opportunities for stability and growth, describing the current era as standing “at the confluence of opportunities and vulnerabilities.

  • Tax reform bills: VAT sharing formula tops Senate, executive parley agenda

    Tax reform bills: VAT sharing formula tops Senate, executive parley agenda

    • Tax system long overdue for reform – Minister  
    • Ex-Niger gov slams critics, says many haven’t read bills

    The sharing formula for the Value Added Tax (VAT) between the federal, states and local governments is topping the agenda of discussions between the Attorney General of the Federation and the Senate Adhoc Committee on the Tax Reform Bills, The Nation gathered yesterday.

    Both sides were scheduled to hold their first round of talks at the weekend to iron out the grey areas, but it was not clear yesterday how far they had gone with the issue.

    The bills have sparked a massive controversy across the country with Information and National Orientation Minister Mohammed Idris saying yesterday that the nation’s tax administration system was long overdue for reform on account of the general attitude of taxpayers.

    He spoke on a day a former governor of Niger State, Dr. Babangida Aliyu, lashed out at critics of the bills.

    Many of the critics, he said in Abuja, have not even taken time to go through the documents before passing judgment on them.

    The Senate at its plenary session on Wednesday constituted the ad hoc committee headed by Minority Leader, Abba Moro, to interface with the executive arm to discuss the contentious areas with a view to probably reaching a consensus.

    Other members of the committee are the Senate Chief Whip, Tahir Monguno (APC, Borno North), Muhammadu Aliero (PDP, Kebbi Central), Seriake Dickson (PDP, Bayelsa West),Titus Zam (APC, Benue North West), Abdullahi Yahaya (PDP Kebbi North), Adeola Olamilekan (APC, Ogun West), Sani Musa (APC, Niger East) and Adetokunbo Abiru (APC, Lagos East).

    The House of Representatives has suspended further legislative action on the bills to allow for wider consultation.

    The Nigerian Southern Senators Forum said in Abuja at the weekend that despite the inherent economic benefits of the bills, the issue of how to share the proceeds of VAT on the basis of derivation between the state governments has become contentious.

    No official was willing to talk on the meeting between the Senate delegation and the AGF yesterday, but sources said the formula for sharing VAT was a key issue at the deliberation.

    The bills include the Nigeria Tax Bill 2024, which aims to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country and reduce disputes.

    Others are the Nigeria Revenue Service Establishment Bill, expected to repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, as well as the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.

    On Thursday, Senate Leader Opeyemi Bamidele denied media reports that the Red Chamber had suspended legislative action on the four bills.

    The southern senators said that contrary to the views in some quarters, the bills would help enhance the economic development of the country.

     They claimed that the derivation formula as proposed in one of the bills for sharing VAT was the reason some lawmakers were opposed to the proposed legislations.

    The forum urged the Federal Government, through the Tax Committee (and Fagbemi’s team), “to demonstrate, using data, that no sub-national in Nigeria will be at risk of a lower VAT revenues post reforms.

    “This will go a long way in allaying the fears currently being expressed by some states of the federation.”

    Tax system long overdue for reform -Information Minister

    Shedding more light on the bills in Kaduna yesterday, Information and National Orientation Minister Mohammed Idris said they could not have come at a better time,” especially as part of a larger set of macroeconomic reforms aimed at setting the country on an irreversible path of growth and development.”

    He said the executive arm of government, including President Bola Tinubu, was prepared to listen to and work with all stakeholders to ensure that all concerns on the bills “are duly and comprehensively addressed.”

    “We will continue to ensure open lines of communication and engagement with the National Assembly and all other stakeholders on these taxation bills.

    Read Also: Town planners hail Tinubu over Dangiwa’s appointment as minister

    “We are all in this together, as one people, one nation, and just as we are being called upon to make collective sacrifices, we will also collectively reap the abundant social and economic benefits of all of these necessary reforms,” Idris said as chairman at the 2024 Annual Public/AGM and Awards of the Kaduna State chapter of the Nigerian Institute of Public Relations (NIPR).

    The minister, who spoke on Tax Reform: The role of Public Relations in fostering constructive dialogue for national economic renaissance said it was “very inspiring and heartwarming to see Nigerians from all walks of life coming out to express their views and opinions on these matters of critical national importance, as such is the very essence and meaning of democracy.”

     Continuing, he said: “In spite of the challenge of trust deficit that tends to crop up around matters of governance in Nigeria, we have still been able to have what can be adjudged as robust debate on this sensitive issue.

    “Even with our keenness for fundamental reform of Nigeria’s governance and fiscal systems, the Tinubu administration will never do anything to undermine the ideals of participatory democracy.

    “The current mandate and responsibility that we have for governing and reforming Nigeria at this time came by way of democracy, and we will continue to live up to those very high democratic standards and expectations.

    “All over the world, effective taxation is important as a source of financial power for governments to provide social services for their citizens.

    “However, there is plenty of reason to believe and assert that Nigeria’s tax administration system has become long overdue for reform, on account of design and implementation flaws as well as the general attitudes of taxpayers toward taxation.

    “As President Bola Ahmed Tinubu continues to implement an ambitious fiscal reform agenda that will devolve more resources to Nigeria’s State and Local Governments, and ultimately to the Nigerian people, in the spirit of true federalism, citizen engagement will become ever more critical.

    “Society advances by mutually respectful engagements, where we give voice to diverse opinions, and respect those who we disagree with.

    “We will certainly not always agree on all issues, perhaps not even on most. But we will always be guided by the fact that the things that unite us – our common humanity, our nationhood, our sense of patriotism, our collective vision for a Nigeria that works for all – will always be more important and more meaningful than our differences of age, religion, region, ideology, gender, culture, and social class.”

    Also speaking, NIPR President, Dr. Ike Neliaku, spoke of the institute’s support for the expected reality and implementation of the tax reform in the country by using the vocal voices of the institute across the country.

    Also, the Lead Discussant, Professor Mustapha Bagudo Muhammad, gave a thorough insight into the numerous advantages of the reform while all the panelists, including Senator Shehu Sani, Prof. Cosmos Eze and Prof. Hauwa’u Evelyn Yusuf, all gave their nod to the proposed tax reform.

    Senator Sani in his submission said countries like Saudi Arabia and United Arab Emirates have started taking measures to address their post oil future, adding that tax reform is one of the very important steps for Nigeria and Nigerian economic feature.

    Islamic scholar, Sheikh Ahmad Gumi and former Chairman Christian Association of Nigeria (CAN) Kaduna State, Dr. John Joseph Hayab, both argued that the tax reform was necessary. They, however, called for more awareness creation and sensitization.

    Ex-gov Aliyu: Where critics, govt got it wrong on bills

    Dr. Aliyu who governed Niger State between 2007 and 2015 said the federal government was at fault for what he called its poor communication on the bills.

    He also lashed out at critics, many of whom he said had not even read the bills before passing judgement on them.

    “I was speaking to the NSA when we were in the common room, and I said to him, look, many of the people debating the tax bill have not read it,” he said at graduation ceremony for the Executive Intelligence Management Course 17 at the National Institute for Security Studies in Abuja.

    He added: “But again, there is the problem of communication; the government should speak more when the majority of the people are not literate.

    “You should be the first to speak on any major policy, particularly one that will bring changes so that people can understand it. People can know that there is no policy that will come to somebody; if the majority comes and one person is disturbed, you can only tell him. But you cannot say because of one person, the policy cannot be taken. So, communication is very, very important.”

  • League of northern democrats sets up expert panel to review tax reform bills

    League of northern democrats sets up expert panel to review tax reform bills

    The League of Northern Democrats, under the leadership of former Kano State Governor Senator Ibrahim Shekarau, has assembled a team of experts to critically analyze the four tax reform bills currently before the National Assembly.

    In a statement issued by the League’s spokesman, Ladan Salihu, it was revealed that the committee comprises legal experts, tax specialists, and academics. 

    The team has been given a one-week timeline to complete the review and submit its recommendations.

    While Salihu refrained from naming the committee members, he assured that the League is committed to ensuring that the provisions of the bills align with the national interest.

    The statement reads: “Given the current raging concerns and controversies on the Tax Reform Bills currently before our National Assembly, the League of Northern Democrats (LND) wishes to inform the Northern public that it has inaugurated a distinguished Technical Committee tasked with reviewing the four tax reform bills clause-by-clause so as to reach an informed position on each clause therein.

    “This initiative underscores our commitment to ensuring that laws reflect the principles of justice, equity and prosperity for all Nigerians, with the sole intent to safeguarding the developmental interests of our peoples.

    “The committee, composed of dedicated Northern experts in law, public accounting, legislation and academia, has taken to itself one week to conclude a comprehensive review of the bills.

    “Their mandate includes identifying provisions that may be injurious or inequitable, proposing necessary amendments, and ensuring that each clause of the bills upholds the constitutional, religious and cultural norms of our people, while promoting national unity and fairness.

    Read Also: ‘Expedite work on tax reform bills’

    “At the conclusion of its assignment, the committee will publicly present its findings in an electronic and tabular format, effectively communicating its recommendations to policymakers, legislators, the media and the Nigerian public.

    “The LND assures the public of our confidence in the committee’s ability to produce thorough and well-reasoned recommendations. These will aim to maximize benefits for all Nigerians, ensuring that the tax reforms support sustainable development and equitable economic growth across the nation.

    “We urge Nigerians to stay tuned for LND’s public presentation, which will provide clear insights into the bills and our proposed policy position.

    “The League of Northern Democrats remains steadfast in our mission to advocate for policies that foster justice, prosperity and unity in Northern Nigeria and the country at large.”

  • ‘Expedite work on tax reform bills’

    ‘Expedite work on tax reform bills’

    The Arewa Youth Movement has thrown its support behind the tax reform bills before the National Assembly.

    The group urged the National Assembly to expedite action on the bills which have generated controversy and led to its suspension to allow for further consultation.

    The group said the “comprehensive legislation has the potential to transform the country’s fiscal landscape, promote economic growth, and ensure a more equitable distribution of resources.”

    The President, Arewa Youth Movement, Sa’ad Muhammad said the bills would benefit the North by promoting economic development, creating jobs, and increasing revenue generation.

    Read Also: Akpabio: Senate stands with Nigerians on Tax Reform Bills

    He added that the Northern Governors’ Forum has also acknowledged the bill’s potential to address the region’s developmental challenges.

    He said: “The tax reform bills have the potential to address some of the underlying structural issues that have hindered Nigeria’s economic growth. By broadening the tax base, reducing tax rates, and promoting tax compliance, the bill will help to increase government revenue, promote economic diversification and enhance transparency and accountability.

    “We urge the National Assembly to expedite the passage of the tax reform bill, ensuring that its provisions are implemented effectively to benefit all Nigerians, particularly those in the Northern region.

    “We believe that this legislation has the potential to transform Nigeria’s economy, promote sustainable growth, and ensure a brighter future for all citizens.”

  • Tax Reform Bills: Separating fiction from facts

    Tax Reform Bills: Separating fiction from facts

    By Abdulrahman Yusuf Muhammad

    On October 3, President Bola Ahmed Tinubu transmitted the tax reform bills to the National Assembly for consideration and passage into law. The bills, a product of months of work by the Presidential Committee on Fiscal Policy and Tax Reform seek to significantly reform the Nigerian tax landscape, eliminate multiple taxes, simplify tax compliance, foster the ease of doing business and improve efficiency in tax administration in Nigeria.

    The four bills under the tax reform bills are; the Nigerian Tax Bill, the Nigerian Tax Administration Bill, the Nigerian Revenue Service Bill and the Joint Revenue Board Bill.

    The Nigerian Tax Bill seeks to consolidate all taxes within the providence of the federal government which were previously administered under the separate tax laws into one piece of legislation. In doing so the bill proposes to repeal 11 tax laws and one subsidiary legislation and amend 13 tax laws and two subsidiary legislations.

    If passed into law, the Nigerian Tax Bill will usher a significant change to the tax rate for various classes of taxes. Income taxes for both individuals and companies will witness a significant reduction. The threshold for income tax liability has now been increased to N800,000 per annum as opposed to the present N300,000 per annum. In the same vein, the turnover threshold for small companies for income tax liability has been increased to N50 million. Thus, companies with a turnover of N50 million are exempted from paying income tax. Under the extant tax regime, the minimum threshold is N25 million. Also, the company’s income tax rate will regress gradually from the present 30% to 27.5% in 2025 to end at 25% by 2026. 

    The Nigerian Tax Bill seeks to eliminate certain special deductions such as the NITDA levy, the NASENI Levy and the TETFUND Tax and consolidate them into a single Development Levy. Equally, the bill proposes to make changes to the VAT rate, VAT sharing formula among the tiers of government and even attribution for the purpose of derivation, the VAT rate will witness a progressive increase from the current 7.5% to 10% then 12.5% in 2025 and 2026 respectively to then culminate at 15% in 2030 in line with ECOWAS recommendation for VAT rates for member states. The VAT sharing formula among the tiers of government which used to be 15%, 50% and 35% to the federal, state and local governments respectively will now change to 10% to the federal government, 55% to the state governments and 35% to the local government. Under section 40 of the extant VAT Act, 20% of the VAT generated is shared based on derivation 50% based on equality and 20% based on population. The new model proposes that 60% will be shared based on derivation.

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    Even before the transmission of the bills to the National Assembly, the bills have suffered stiff opposition. First, the National Economic Council (NEC) chaired by the vice president advised the president to withdraw the bills and engage in wider consultation. Then the Northern Governors Forum in a terse statement opposed the bills claiming that the bills if passed into law would put the North at a disadvantage. The forum then called for wider consultations on the bills. Other socio-political organisations have raised their voices against the tax reform bills. It is surprising that neither the National Economic Council, the Northern Governors Forum nor other opponents of the bill have advanced plausible and constructive reasons for opposing the tax reform bills. Judging however from all the statements that have been issued, the key problem is on the VAT reform.

    The grouse of the opponents of the bill is anchored on the VAT sharing formula under the bill which prescribes that 60% of VAT generated shall be shared based on the derivation as provided under section 77 of the Nigerian Tax Administration Bill. The opponents of the bill have heavily objected to this provision of the bill because the 60% derivation is believed to be skewed for the benefit of Lagos which is the major contributor to the VAT pool. For example, data from the National Bureau of Statistics showed that Lagos State’s contribution to the VAT pool in August is a humungous 56% of the VAT generated. By this argument, Lagos State will be entitled to take a significant chunk of the VAT generated in the VAT pool. By the time Lagos State takes its deep bite into the VAT pool on account of derivation. The remaining 36 states including the FCT will be left with crumbs and peanuts when what is left in the VAT pool is shared among the remaining states.

    But this argument could have been true if derivation is considered under the extant dispensation, where derivation is attributed to the location where the VAT return was filed and not the actual location where the VATABLE supply is consumed. It is because of the operation of the present model that Lagos State gets the highest VAT contribution because a good number of the major companies in Nigeria are headquartered in Lagos and their VAT returns are filed centrally through Lagos State regardless of the place of actual consumption of the VATABLE supply.     

    However, the conclusion of the opponents of the VAT reform is incorrect. Under the new derivation model, VAT derivation will be attributed to where the VATABLE supply is consumed. Section 22 (12) of the Nigerian Tax Administration Bill provides that for attribution; “all VAT returns shall provide details of derivation of taxable supplies by location in a manner prescribed by the service.”

    It is clear from this provision of the Tax Administration Bill that regardless of where the VAT return is made, for the purpose of derivation, attribution will be to the location of consumption of the VATABLE supply. Thus, states will now enjoy all VAT paid in their location returned to the state where the VATABLE supplied was consumed.

    The only way to understand whether the proposed sharing formula under the tax reform bills is to the disadvantage of other states is to gather the data of the actual VAT consumption of all the states in the country and do a mock distribution using the proposed formula, compare with what the states are receiving under the present sharing formula. It is only through this comparative analysis that states can ascertain whether they would be better off or worse off under the old mode and vice versa. Anything short of this can only be bogus and baseless.

    While the opponents of the bills especially the governors of the northern states have concentrated their attention on the VAT reform, my candid view is that the area of great worry and concern to the northern governors and indeed other states should be the income tax reform which has the effect of taking out a good number of eligible income taxpayers from the personal income tax net. This will significantly reduce the revenue generated by non-commercially viable states that are mostly populated by salary earners whose salary/income is below the threshold for personal income tax liability under the Nigerian Tax Bill. States in this category will lose the revenue once generated from the personal income tax stream.

    A community review of the tax bills submitted to the National Assembly indicates that the positives of the bills outweigh the negatives and any perceived shortcomings. Especially considering thus far no constructive criticism has been proffered to highlight any shortcomings in the bill.  The federal government must however soften its pedals on the bills given that many states have raised concerns regarding the bill. It is better to take a strategic pause to address any genuine misgivings about the bills to obtain the buy-in of all the stakeholders for the interest of the effective implementation of the bill than to proceed with a hurry that may derail all the positives that the bill may yield in the politics that may play out in the process of passing the bill into law.    

    •Yusuf, ACArb, ACTI writes from Kano.

  • Senate didn’t suspend, withdraw Tax Reform Bills, says Bamidele

    Senate didn’t suspend, withdraw Tax Reform Bills, says Bamidele

    The leader of the Senate, Senator Opeyemi Bamidele (APC-Ekiti Central), on Thursday denied media reports claiming that the red chamber had suspended or withdrawn from considering or deliberating on the Tax Reform Bills.

    Bamidele who spoke during plenary warned against the pervasive misrepresentation of the intent of the Senate on the tax reform bills.

    He noted that the upper chamber “cannot be bullied into adopting a certain procedure” not consistent with its rules and proceedings.

    Bamidele said the Senate constituted a special committee chaired by the minority leader, Senator Abba Moro on Wednesday, to resolve grey areas on the tax reform initiatives.

    The Senate presided over by Deputy President of the Senate, Senator Barau Jibrin, on Wednesday, had set up the special committee to engage the Attorney-General of the Federation and Minister of Justice, Mr. Lateef Fagbemi, SAN to resolve the issues surrounding the Tax Reform Bills, 2024.

    Barau had also declared that the Senator Sani Musa-led Senate Committee on Finance should stop its six-week legislative assignment on the fiscal Bills until all grey areas had been sorted out.

    Barau had said: “It’s on this note that the committee on finance that the bills have been referred to, should put on hold further action on it – public hearing and other issues –  until we resolve these issues.

    “All sides will be given the opportunity and we shall resolve the issues before anything is allowed to go.”

    The media, accurately reported that the Senate had suspended further considerations and deliberations on the Tax Reform Bills, 2024.

    Bamidele in his point of order, invoked Order 42 of the Senate Rules as well as Section 60 and 62 (1-4) of the Constitution of the Federal Republic of Nigeria, 1999 (amended) to clarify the position of the Senate on the Tax Reform Bills, 2024.

    In his presentation, Bamidele noted that no part of the votes and proceedings of the Senate where it was stated  that further consideration of or deliberation on the Tax Reform Bills, had been suspended or withdrawn.

    He explained that the Federal Executive Council through the Office of the President of the Federal Republic of Nigeria sponsored the Bills at the two chambers of the National Assembly, saying the Bills were not private member bills.

    Bamidele said: “Whatever we are doing is in accordance with the provision of our constitution. We are the legislative arm of government.

    “We take our instruction and guidance from the 1999 Constitution and not from any other institution or individual no matter how highly placed, not even from the governors or any other person than the 1999 Constitution.

    “What was reported is that the Senate had suspended further consideration of or deliberation on the Tax Reform Bills 2024.

    “The media platform even invited the Nasarawa State Governor, Mr. Abdullah Sule, pointedly telling the governor that the Senate had withdrawn the Bills.

    “The media platform even described Bills as conundrum, which suggested that the Bills were problematic and we do not move from one television to another.

    “The privilege that we have is the Senate of the Federal Republic of Nigeria. This is where we do our deliberation. This is where we make the law. This is where we do effective representation of our people.

    “If we have an issue to clarify, this is also the floor that we have rather than issuing press statements.

    “Mr. President, we have just passed our votes and proceedings. It is a reflection of our deliberation of the previous legislative day.

    “Nowhere in our votes and proceedings was it stated that we suspended further deliberation on the Tax Reform Bills 2024. This is because we did not.

    “It is important to place on record that this Senate did not suspend and does not intend to suspend deliberations or consideration of the Tax Reform Bills 2024.

    “It is a misunderstanding of the legislative process for any person to have even reported that we have withdrawn the Bills.

    “The Bills were executive bills transmitted by the Executive Arm of Government through the Office of the President of the Federal Republic of Nigeria.

    “It is only the executive arm that withdraws this bill. It is not a private member bill sponsored by any Senator.

    “So, no Senator is going to withdraw the Bills and there is no reason for these Bills to be withdrawn.

    “In a legislative process, it is normal that some people will have concerns that is why in its wisdom, this Senate is referring this matter to the Senate Committee on Finance.”

    Bamidele also warned that any attempt from any quarter “to intimidate the Parliament will be undemocratic,” saying that the National Assembly and its members would not be distracted from discharging their constitutional duties.

    He further said: “We will encourage consensus, discussion and engagement at all levels. But we cannot be bullied into adopting a certain procedure not consistent with the rules and proceedings of the Senate.

    “As far as we are concerned, the Tax Reform Bills 2024 are still alive in the Senate. The Bills are equally  receiving consideration at various levels. And we are open to further discussion, consideration and engagement on the Bills.”

    Senate President Godswill Akpabio in his reaction, commended Bamidele for his submission and explained that some sections of the media were misled to report that the Senate had withdrawn the bills.

    Akpabio said: “At the National Assembly, we were all elected to do our work and that is the work of lawmaking in the overall interest of Nigeria.

    “We do not do our work through social media. Neither do we do it through any committee or congregation of the church or any forum of any nature.

    “We do our work according to our conscience in the best interest of Nigeria. The mechanism of lawmaking can be further explained to the public.

    “The moment the bills went through second reading in the Senate, it simply means that the bills are alive. The next procedure is for the Committee on Finance to commence the process of consultations and public hearings.

    “This is with a view to bringing recommendations back to the chamber. In the wisdom of the Senate yesterday (Wednesday), we had, in a closed session, set up a committee to be headed by the Minority Leader (Abba Moro) before the passage of the second reading.

    Read Also: Akpabio to governors: attend public hearing if you have ‘issues’ with Tax Reform Bills

    “We said, in the event that some people are either uneducated on some aspects of the bill or confused or there are grey areas to be sorted out, they should interface with the necessary executive quarters, from the chairman of Federal Inland Revenue Service to the Attorney General of the Federation, and if need be, even Mr. President.

    “That committee was an internal mechanism of the Senate, different from the committee on finance.

    “I think that was what was announced yesterday (Wednesday), and we said the committee should immediately move into work.

    “There seems to be some grey areas to be sorted out. I want to thank Senator Abba Moro, the chairman of the committee, because as soon as that announcement was made yesterday, he immediately started consultation.

    “In fact, he held a meeting today (Thursday) that he has set up to enable him to abstract the process so that the chairman of the Senate Committee on Finance and members of the committee can commence public hearings either next week or as soon as practicable.

    “The bills are alive, they have not been suspended, the actions have not been suspended, the bills have not been withdrawn and the bills have passed second reading in the Senate and further legislative actions are taking place, including the setting up of this adhoc committee,” Akpabio stated.