Tax reform bills: Reps c’ttee proposes major changes
The House of Representatives Committee on Finance has proposed major changes in the tax reform bills sent to the National Assembly by President Bola Ahmed Tinubu.
Daily Trust reports that the committee modified a number of the clauses, expunged some, retained many and introduced some new clauses in the bills.
The chairman of the House Committee on Finance, Rep James Abiodun Faleke, yesterday presented the reports on the consolidated tax reform bills to the House at the resumption of plenary.
President Bola Ahmed Tinubu had in October 2024 transmitted the four tax reform bills to the National Assembly for consideration and passage.
The presentation of the reports followed the conclusion of a three-day public hearing on the bills and the subsequent review of the memoranda presented to the committee as well as inputs made by various stakeholders during the hearing.
The reports presented to the House include that on a “Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States and Local Governments; Prescribe the Powers and Functions of Tax Authorities, and for Related Matters (HB.1756) ” (Referred: 12/2/2025).
“A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No.13, 2007 and Enact the Nigeria Revenue Service (Establishment) Bill to Establish Nigeria Revenue Service, charged with Powers of Assessment, Collection of, and Accounting for Revenue Accruable to the Government of the Federation and for Related Matters (HB.1757)” (Referred: 12/2/2025).
“A Bill for an Act to Establish Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombud, for the Harmonisation, Coordination and Settlement of Disputes arising from Revenue Administration in Nigeria and for Related Matters (HB.1758) and a “Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide For Taxation of Income, Transactions and Instruments, and for Related Matters (HB.1759).”
Daily Trust reports that barring any last minute change, the House of Representatives will begin the clause-to-clause consideration of the bills on Thursday.
Drops VAT increase, modifies inheritance tax
Meanwhile, the committee has recommended a number of changes to the proposed bills and recommended to the House for clause-by-clause consideration and passage.
The changes made to the bills addressed some of the contentious clauses such as increase in VAT rate, scrapping of TETFUND, NITDA and NASENI, modification of inheritance tax; VAT derivation and distribution formula, among others.
While it was proposed in section 146 that VAT should be increased from the current 7.5% to 10% by 31st December, 2025; 12.5% from January 2026 to December 31st 2029 and to 15% from January 2030 upwards, the committee recommended that the current 7.5% VAT rate be retained.
The committee also modified the contentious clause on inheritance tax. While it was proposed that an estate left by a deceased would be taxed, it has been modified to say that whoever inherits such estate or part of it as an heir and invests it in business yielding returns will now be taxed.
TETFUND, NITDA, NASENI to remain
The Section 59 of the Nigerian Tax Bill which proposed to stop the funding of TETFUND, NITDA and NASENI by 2030 has been modified by the committee, which proposed that the funding should continue, while recommending additional agencies to benefit from the 4 % development levy fund.
The committee recommends that the fund accruing from the 4% development levies imposed on the assessable profits of all companies shall be distributed as follows — (a) Tertiary Education Trust Fund — 50%; (b) Nigerian Education Loan — 3%; (c)National Information Technology Development Fund — 5%; (d) National Agency for Science and Engineering Infrastructure — 10%.
Others include Social Security Fund – 10; Defence Infrastructure Fund, 10%; Nigeria Police Trust Fund – 5%; National Sports Development Fund– 3%; National Board for Technological Incubation – 3% and National Cybersecurity Fund – 1%.
The committee further recommended that for the purpose of this section, every beneficiary Agency and Fund in subsection (3) shall be required to prepare and submit their income and expenditure to the National Assembly for appropriation.
While Section 22 of the bill proposed that “a taxable person shall, in respect of Value Added Tax (VAT), with or without a notice and whether or not an economic activity has taken place, submit a return to the Service in the prescribed form, by the date specified in subsection of this section or in a regulation issued by the Service for that purpose, the committee recommended that a taxable person shall, in respect of Value Added Tax (VAT), with or without a notice and whether or not an economic activity has taken place, submit a return to the Service in the prescribed form, on or before the 21st day of the following month.
Attribution irrespective of location
While the Section 22 (12) proposed that “For the purpose of attribution, any return under this section shall provide details of derivation of taxable supplies by location in a manner prescribed by the Service”, the committee recommended “For the purpose of attribution, any return under this section shall provide details of consumption of taxable supplies, irrespective of where the return is filed.”
Section 7(2) of the Nigerian Tax Administration Bill proposed that “Where a relevant tax authority refuses to register or issue a Tax ID upon request under subsection (1) of this section, the relevant tax authority shall, within two working days of the decision, notify that person of the refusal. However, the committee recommended that “Where a relevant tax authority refuses to register or issue a Tax ID upon request under subsection (1) of this section, the relevant tax authority shall, within five working days of the decision, notify that person of the refusal with reasons.
On fiscalisation
Section 23 of the bill proposed that where the Service deploys an Electronic Fiscal System (EFS) any person making a taxable supply shall use the EFS for recording and reporting all supplies. It also proposed that the Service may prescribe technical specifications and security standards for using the EFS to record and report supplies. It further added that taxable persons shall be responsible for maintaining accurate records of all transactions passing through the EFS.
However, the committee recommended that, “The Service shall specify the fiscalisation system to be adopted and a transition arrangement for its implementation.”
It also recommended that (1) “Where the Service deploys an Electronic Fiscal System (EFS), any person making a taxable supply shall use the EFS for recording and reporting.”
The committee further added that “Taxable persons shall be responsible for maintaining accurate records of all transactions passing through the EFS and that the Service shall specify the fiscalisation system to be adopted and a transition arrangement for its implementation.”
Section 27 proposed that, “Every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns as specified in the regulation issued for that purpose.
“Every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns to the appropriate tax authority, as specified in the regulation issued for that purpose.
Company tax rates
Section 56 of the Nigerian Tax Bill proposed that “Companies shall be levied, for each year of assessment in respect of total profits of every company, in the case of— (a) a small company, at zero per cent; and (b) any other company, at the rate of– (i) 27.5% in 2025 year of assessment, and (ii) 25% from 2026 year of assessment.”
However, the committee recommended that tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of— (a) a small company, at zero percent; and (b) any other company, save for companies in subsection (2) of this section, at the rate of 30 per cent. It further recommended that companies operating in priority sectors as contained in the Eleventh Schedule of this Act shall be subject to income tax at the rate of 25 per cent, during the priority period.
90% of contentious areas addressed – Lawmaker
Speaking to our reporter yesterday, Rep. Bappah Aliyu Misau (PDP, Bauchi) said he had gone through the contentious issues and noticed that over 90 per cent of the concerns raised had been addressed.
He said: “I had the privilege to be at the public hearing in order to feel the pulse of the nation as regards the bills. So, what I read first when I saw the report were the contentious and controversial issues. That was the first thing I did to see how the diverse opinions and suggestions by Nigerians as groups and individuals have been considered.
“The issue of VAT increase has been addressed; the issue of TETFUND, NITDA and NASENI scrapping has been removed. The proposed VAT increase from 7.5 per cent to 10 per cent and subsequently to a higher percentage has been removed.
“Inheritance Tax was the most critical aspect in the Tax reform bills which affects all Muslims. The issue has been addressed squarely. Initially, it was proposed that the estate left by a deceased would be taxed. That aspect has been removed. What is now contained in bill is that whoever inherits the estate or part of it as an heir and invests it in business, the business or the property yielding returns to him will be taxed.
“The other issue we raised about the Southern part getting more share of the VAT has also been addressed. Now we have 30 per cent derivation rather than 60 per cent. The derivation is also not as it was before; it will be based on consumption, not based on where a company or entity is headquartered.
“So, it is 30 per cent on consumption. And again, we said, this 30 per cent because of fiscalisation. What needs to be done now is to provide the technology that can track the consumption and provide the needed data for computation.
“The other issue addressed is the composition of the board of the proposed Joint Tax Board. After the chairman, it was now agreed in the bill that persons will be appointed to the board from all the 36 states and six executive directors will be appointed with one each representing each of the political zones.
“So, the executive directors will serve as heads of operations. Before, the provision was to have only non-executive directors who almost have no power, but will act on what the chairman directs them to do. What is in the bill now is that the zones will bring one person each and the president will be the one to appoint the executive directors for a tenure of four years, renewable. So, all the grey areas have been taken care of.
“The excessive powers given in the initial bill have been toned down with the proposed appointment of one person from the 36 states as members and the appointment of the executive directors from the zones.
“So, the fear of the chairman wielding excessive powers has been allayed and addressed,” he said.
Fear in the North
Daily Trust reports that before the public hearing was held, there was a lot of push back on the bills especially from the North.
Governors and members of the National Assembly from the region had noted serious concerns on some provisions in the presidential bills.
However, after serious debates and interventions, a consensus was reached between the governors and tax reform team, a development that paved the way for public hearing at the two chambers of the national assembly.
Some legislators told the Daily Trust after the public hearing, senators and members of the House of Representatives from the North had commissioned the services of some consultants who helped in bringing out serious defence on why some provisions in the original bills must be expunged.
“We succeeded in proving our fears and gladly, Rep Faleke, who is the chairman of the finance committee agreed,” one of the sources said.
But another Rep member said they are still entertaining some fears.
“Of course, most of the issues we corrected at the House committee have been relayed to the Senate Committee on Finance led by Senator Sani Musa from Niger State. We are hopeful that during the clause by clause consideration, the issues would be taken seriously.
“We want to believe that some of our colleagues both in the Senate and the House of Representatives would not be compromised,” the source said.
Red flags
Our correspondents report that outside the National Assembly, still there are concerns that several contentious and “potentially dangerous” provisions in the Bills have not been dealt with despite the recent public hearing on the Bills.
A new research conducted by the Centre for Democratic Development Research and Training (CEDDERT) highlighted these provisions, saying key issues that directly impact citizens were neglected.
The publication, authored by Abubakar Siddique Mohammed and Aliyu Rafindadi Sanusi was the second to be released by the group of intellectuals since the debate on the tax reform bills began.
In the earlier publication released in December, the group had highlighted how some of the provisions could threaten the Nigeria’s federal system.
And in the latest document released in February, CEDDERT highlighted “potentially dangerous” provisions which can be abused.
The scholars explained that the consensus emerging from the several political bargains by the elites over the bills “would have serious economic and social consequences because it has neglected the many aspects of these bills that are important for the people’s welfare.”
According to CEDDERT, President Bola Ahmed Tinubu was able to “snatch” some compromises from the governors “using all forms of subterranean means.”
For instance, Section 75(1) of the proposed Tax Administration Bill grants the President unrestricted authority to exempt any company or group of companies and any of their profits, regardless of the source, from income tax on any grounds deemed adequate.
It also pointed out that under Section 75(2), the President is empowered “to amend, add, or repeal any tax exemption by issuing an executive order.”
The group stated that “there is no democratic country in the world where a president has such powers! Not in the US, the UK or even Russia.”
According to the researchers, this section of the bill, which gives significant power to the President, if passed “will deepen centralisation of authority, increase unproductive lobbies, reduce revenue and increase corruption in ways similar to import duty waivers given in the past.”
The report also highlighted Section 60 of the NTAB which empowers the authority to seize assets of a person whose assessment is finalised and conclusive.
“They do not need further approval of the court (section 60(b)(3)) to distrain any property. They can use police with reasonable force to break and enter the property (Section 61). The authority may sell the seized property after 14 days (section 60 (b)(4)) with court approval.”
According to the report, this practice is now restricted to require court approval or abolished in many jurisdictions because of abuse.
“This section is all the more dangerous due to weak state institutions. With this provision, citizens can be targeted and crippled financially. Indeed, it is in violation of the constitution and of the law of natural justice,” the scholars stated.
According to the group, in line with the global best practice, and the provision of the Joint Revenue Board that establishes the Tax Appeal Tribunal, all tax disputes should be settled in courts.
It also queried the introduction of special purpose tax officers, saying it would only add to the retinue of law enforcement officers “who have continued to complicate law enforcement itself” as the officers were given the powers of police officers.
The publication also examined Section 63 which empowers the authority to investigate or cause an investigation to be conducted on any person, whether or not it is reported, based on suspicion arising from lifestyle (Section 60 (3)). The authority can use any law enforcement agency for the purpose (Section 63(2)).
It opined that this can be used to hound political opponents given “the dictatorial tendency of our leaders.”
“These complex and excessive powers are not only dangerous to the citizens, but also to the politicians themselves. The danger of these provisions reminds us of the attempt to use tax laws to prevent Dr. Nnamdi Azikiwe and Mallam Aminu Kano from contesting election,” it added.
Daily Trust
