The House of Representatives Committee on Finance has introduced significant changes to the tax reform bills submitted by President Bola Ahmed Tinubu to the National Assembly.
The revisions include modifications, deletions, and additions before presenting the updated version to the House.
During Tuesday’s plenary, Committee Chairman Rep. James Abiodun Faleke presented the revised tax reform bills after a three-day public hearing that considered input from various stakeholders.
President Tinubu originally submitted four tax reform bills in October 2024 for legislative assessment.
These bills focus on regulating tax collection and revenue distribution across federal, state, and local governments, establishing a Joint Revenue Board, and consolidating tax laws under a unified Nigeria Tax Act.
Unless unexpected delays arise, the House is scheduled to commence a clause-by-clause evaluation of the bills on Thursday.
Major Revisions: VAT Increase Rejected, Inheritance Tax Adjusted, Funding for Agencies Maintained
One of the most debated aspects of the original proposals was the plan to raise the Value Added Tax (VAT) from 7.5% to 10% by December 2025, followed by further increments to 12.5% in 2026 and 15% in 2030. The committee has opted to retain the existing 7.5% VAT rate.
A key amendment was made to the inheritance tax policy. Initially, the proposal suggested taxing estates left by deceased individuals.
The updated provision now stipulates that taxation will only apply if an inherited estate is invested in a business that generates revenue.
The committee also reversed the planned termination of funding for the Tertiary Education Trust Fund (TETFUND), National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI) by 2030.
Instead, these organizations will continue to receive financial support, alongside other government programs, through the 4% development levy on corporate profits.
The revised allocation of funds from the levy includes:
TETFUND: 50%
Nigerian Education Loan Fund: 3%
National IT Development Fund: 5%
NASENI: 10%
Social Security Fund: 10%
Defence Infrastructure Fund: 10%
Nigeria Police Trust Fund: 5%
National Sports Development Fund: 3%
National Board for Technological Incubation: 3%
National Cybersecurity Fund: 1%
To enhance transparency, each beneficiary agency must submit financial reports to the National Assembly.
Changes to VAT Filing and Tax Attribution
The committee introduced modifications to VAT filing procedures, requiring taxpayers to submit returns by the 21st of the following month, irrespective of whether they had economic activity during that period.
A crucial adjustment was also made to tax attribution. Instead of linking revenue to a company’s headquarters, VAT derivation will now be based on actual consumption, ensuring a fairer distribution of tax revenue nationwide.
Corporate Taxation and Electronic Fiscal System (EFS) Implementation
The initial proposal set corporate tax rates at 27.5% in 2025 and 25% from 2026. However, the committee recommended a uniform 30% tax rate for most businesses, while companies in priority sectors—defined in the Eleventh Schedule of the Act—will be taxed at 25% during their priority period.
Regarding tax collection technology, the committee suggested that the Nigerian Revenue Service should determine the fiscalisation system to be adopted, instead of enforcing an immediate transition to an Electronic Fiscal System (EFS). The agency will also establish a phased implementation plan.
Lawmakers Commend Adjustments, Say Concerns Addressed
Reacting to the revisions, Rep. Bappah Aliyu Misau (PDP, Bauchi) acknowledged that over 90% of concerns raised by stakeholders had been resolved.
He cited the decision to scrap the VAT hike, revise the inheritance tax, and adjust the VAT revenue-sharing formula, which now allocates 30% based on consumption instead of the previous 60% based on company headquarters.
Misau also praised the restructuring of the proposed Joint Tax Board, which will now include representatives from all 36 states, along with six executive directors from Nigeria’s geopolitical zones.
The initial bill had given excessive authority to the chairman, but the new structure promotes balanced decision-making.
With these revisions, the tax reform bills will undergo further legislative scrutiny, with the House expected to commence a detailed review in the coming days.