Senate Advances Tax Reform Proposals
The Nigerian Senate on Thursday passed the tax reform bills for a second reading, following debates among lawmakers. These bills, forwarded by President Bola Tinubu in October 2024, aim to address key taxation challenges and improve Nigeria’s fiscal framework. The legislation has now been referred to the Committee on Finance, which is expected to provide feedback within six weeks.
Key Features of the Tax Reform Bills
The reform package includes four major bills: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. These proposals aim to simplify tax systems, eliminate double taxation, and create frameworks such as a tax tribunal and tax ombudsman to resolve disputes. Senate Leader Opeyemi Bamidele emphasised that the reforms seek to reduce the tax burden on small businesses and encourage private sector investment.
Proposed Tax Exemptions and Reductions
Bamidele highlighted notable changes in the bills, such as exempting individuals earning below the minimum wage from P.A.Y.E deductions and small businesses with turnovers under ₦50 million from taxes. The bills also propose reducing company income tax from 30% to 25% by 2026, aiming to ease the financial strain on businesses and boost disposable income for individuals.
Mixed Reactions Among Lawmakers
While most lawmakers supported the reforms, some raised concerns. Senator Ali Ndume questioned the timing of the bills and sought further consultations, particularly on issues surrounding derivation and VAT. Despite the opposition, Senate President Godswill Akpabio secured majority support for the bills through a voice vote, officially advancing them.
Presidential Economic Team Addresses Lawmakers
The session also included input from President Tinubu’s economic team, led by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. The team provided detailed explanations about the proposed reforms, emphasising their role in driving economic growth and stability.
Path to Comprehensive Tax Reforms
The passage of these bills for a second reading marks a critical step towards overhauling Nigeria’s tax system. The Senate’s focus on aligning the reforms with constitutional provisions and fostering private sector investments highlights the government’s commitment to economic progress.
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