…New Law To Regulate Taxes Takes Effect January
The Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has said that the committee has succeeded in harmonizing taxes paid by Nigerians to less than 10 from over 60 different taxes.
Oyedele said the essence of the reforms is to reduce the tax burden on vulnerable people and also avoid taxing investment and capital.
He revealed that Nigerian tax laws have been redrafted and awaiting the approval of the National Assembly.
The tax expert said these during an interview monitored by NewsNGR on Monday.
He said, “Some of our reforms also border on sub-national. We have sent about 10 amendments to the constitution to the National Assembly and that includes limiting the number of taxes that individuals and businesses have to pay.
“We feel if we can put this into the constitution, they will put that problem behind us for good forever so that nobody will come and reverse it. We also have a few other interventions we’ve been able to address.
“Some of that include trying to create a harmonized means of taxes. Currently, we have a law that we call approved levies and taxes collectable by federal, state, and local government, which is over 60.
“We have now drafted a law to replace that with the total number of taxes being under 10, which is a single digit. We’ve also had very interesting engagement and development around the national fiscal policy.”
President Bola Tinubu had inaugurated the tax reform committee last year with the mandate to review and redesign Nigeria’s fiscal system with respect to revenue mobilization, quality of government spending and sustainable debt management.
Nigeria has a revenue crisis, and it cuts across all tiers of government. Meanwhile, Nigeria’s tax-to-GDP ratio is one of the lowest in the world and much below the African average.
This has led to over-reliance on borrowing to finance public spending, which in turn limits the fiscal space as debt service costs consume a greater portion of government revenue annually.
As of March 2024, the country’s debt was N121.67tn or $91.46bn.
Oyedele said since the past year, the committee has successfully redrafted Nigerian tax laws which he described as “obsolete.”
“We have a proposal to repeal, redraft our major task laws, whether you’re talking about company income tax, value added tax whether capital gain tax or stamp duty.
“These major tax account for well over 90 per cent to 95 percent of our revenue as a country, and we redrafted them because many of them are so old, there’s no point trying to amend them, like the Stamp Duty law is the law of 1939 before our independence, before the internet was invented, so we thought it’s better to just draft it and say if you have a brand new Nigeria today, what should be the ideal policy around transition.
“So those laws have now been drafted, they’ve gone through all the stages that are necessary, including engagement with stakeholders, public and private sector, as well as with our international partners learning from other countries, and those are now in a state where we’re only just waiting for the final approval from the Federal Executive Council.”
He said the draft bill has been sent to the National Assembly to pass.
Oyedele said, “They should be able to get out of the National Assembly and be passed within a matter of one month to one and a half months for the President to then ascend, and we then hope to spend the rest of the year trying to build capacity, creating awareness, allowing everybody to adjust their assistance where they have to, and for many of these reforms to then take effect from January 2025, which is when the people will begin to see the real impact of the various reforms that we have been undertaking for the past one year or thereabouts.”