Amidst major tax challenges, Nigeria has recently made headlines with the introduction of an ambitious bill aimed at comprehensively reforming its tax system. Dubbed the Nigeria Tax Reform Bill, the plan comprises four key legislative components that address the multiplicity of taxes, seek to improve tax processes and aim to align Nigeria’s tax system with global standards.
The key pillars of the reform include the Nigeria Tax Bill, which is designed to reduce tax overlaps; the Nigeria Tax Administration Bill, which seeks to harmonize tax processes nationwide; the Nigeria Revenue Service (Establishment) Bill, which proposes to rename the Federal Inland Revenue Service (FIRS); and the Joint Revenue Commission (Establishment) Bill, which seeks to establish a Joint Revenue Commission to streamline tax administration across the country.
However, despite these components of the tax reform bill, the northern bloc has expressed reservations about the reforms, according to a publication by Fatshimetrie. President Tinubu has been vocal in his advocacy of the reform, calling on northern governors to support the progress of the bill.
“This bill is not a regional issue but a national initiative,” Tinubu said, emphasizing the impartial intent of the reform. “It is designed to create a fairer and more efficient tax system that uplifts all Nigerians, irrespective of their region.”
In an in-depth analysis of the bill, Ms. Arabinrin Aderonke Atoyebi, Technical Assistant for Broadcast Media to the Executive Chairman of FIRS, described the reform as aimed at transforming Nigeria’s economic landscape by reducing tax complexities and establishing a transparent and equitable model.
The reform is aimed at strengthening compliance, generating increased revenue and funding essential public services by simplifying tax burdens. Tinubu envisions a Nigeria where “businesses can thrive, investments are abundant, and citizens enjoy improved living standards,” and the bill is a significant step in that direction.
One of the most important aspects of the reform is its approach to VAT distribution. The bill proposes a consumption-based VAT derivation model, allocating revenues where goods and services are consumed rather than produced.
This means that while a large telecommunications company may be based in Lagos, the large consumer base in the northern region would ensure that VAT revenues primarily benefit the north.
“This model is not designed to disadvantage any region,” she stressed, addressing stakeholders’ concerns. “It ensures equitable allocation of revenue and is structured to support areas with higher levels of consumption.”
For the average Nigerian citizen, the reform is designed to alleviate the complexities and burdens of the current tax system, making it easier for both individuals and businesses to meet their obligations. This improvement will enable the government to fund quality of life improvements for citizens.
In conclusion, the Nigeria Tax Reform Bill embodies the government’s commitment to economic prosperity, efficiency and equity across regions. As Nigeria embarks on this transformative journey, this bill is a testament to the government’s vision of creating an efficient and equitable tax system where all citizens can prosper.