President Bola Tinubu has rejected the recommendation by the National Economic Council (NEC) to withdraw the proposed tax reform bills from the National Assembly.
Tinubu, in a statement by his Special Adviser on Information and Strategy, Bayo Onanuga, said the ongoing legislative process on the bills at NASS must continue.
NewsNGR reported that the NEC, headed by Vice President Kashim Shettima and composed of 36 state governors, had recommended withdrawal of the bills to allow for further consultations with key stakeholders.
This followed rejection of the contents of one of the bills by the Northern Governors’ Forum on Sunday.
Governors of the 19 northern states had claimed that the proposed derivation-based model for the distribution of Value Added Tax (VAT) was against the region’s interest.
The four executive bills are the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board Establishment Bill.
But Tinubu, on Friday, said the legislative process at NASS would provide a platform for necessary input and modifications to the bill.
Quoting Onanuga, “He (Tinubu) believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.
“While urging the NEC to allow the process to take its full course, President Tinubu welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage.”
The presidential aide added, “When President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023, he had only one objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive. This objective remains more critical even today than ever before.
“The Committee worked for over a year and received inputs from various segments of society across the geopolitical zones, including trade associations, professional bodies, different Ministries and Government Agencies, Governors, traders, students, business owners, and the organised private sector.
“President Tinubu will continue to respect and welcome the advice and recommendations of the National Economic Council, an essential constitutional organ of government on economic matters.”
The chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, had earlier defended provisions of the proposed bills as necessary to create a fairer system that respects the individual differences among states of the nation.
“We share the sentiment expressed by the Northern Governors regarding the inequity inherent in the current model of derivation as a basis for distributing VAT revenue. This issue, in fact, affects many states across all geopolitical zones because the current derivation is mainly determined based on where VAT is remitted, rather than where goods or services are supplied or consumed.
“Our proposal aims to create a fairer system by devising a different form of derivation which considers the place of supply or consumption for relevant goods and services, whether they are zero-rated, exempt, or taxable at the standard rate,” Oyedele had said in a post on X on Tuesday.
Below are the major highlights of the four Bills as provided by Onanuga:
- The Nigeria Tax Bill: This Bill seeks to eliminate multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
- The Nigeria Tax Administration Bill (NTAB): This Bill proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance and enhance the revenue for all tiers of government.
- The Nigeria Revenue Service (Establishment) Bill: The Bill seeks to re-establish the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect its mandate as the revenue agency for the entire federation, not just the Federal Government.
- The Joint Revenue Board Establishment Bill: This Bill proposes creating a Joint Revenue Board to replace the Joint Tax Board, covering federal and all state tax authorities. The fourth bill will also establish the Office of Tax Ombudsman under the Joint Revenue Board, protecting taxpayers’ interests and facilitating dispute resolution.
The presidential aide stressed, “the bills’ overarching objective is to effectively coordinate federal, state, and local tax authorities, thereby eliminating the overlapping responsibilities, confusion, and inefficiency that have plagued tax administration in Nigeria for decades.
“Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.
“The proposed reforms seek to consolidate these numerous taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.
“While there may be differences in approach or specific provisions of the new tax bills, what is not in contention is the need to review our tax laws and how we administer them to serve our overall national development agenda.”