The new tax reform bills under consideration at the National Assembly propose to halt revenue collection by federal agencies such as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Customs Service (NCS).
This was confirmed by the chairman of the Presidential Tax Committee, Taiwo Oyedele, during an interview with Channels TV on Friday.
Oyedele explained that the tax reform bills aim to stop approximately 60 federal agencies from collecting taxes, allowing them to focus on their primary mandates.
He emphasized that the new measures will simplify tax collection across the country and enhance the operational capacity of these agencies.
What he said
Under the proposed bill, all federal taxes would be paid to the Federal Inland Revenue Service (FIRS), which would also undergo a name change.
“If you think about the Nigeria Upstream Regulatory Commission, for instance, they collect royalties from the oil companies. Royalty is a tax. So what they should do is regulate upstream activities, not collecting taxes.
“Even Nigeria Custom services, they collect revenue relating to import duties, VAT, but they should focus on trade facilitation and border protections.
“We have over sixty agencies of the government at the federal level. And of course, a lot more than that, if you put all the states together, collecting taxes and levies. We do not know of any country where that is the case whether it’s in Africa or elsewhere. Why don’t you allow one agency collect taxes and levies? So that government agencies will focus on its primary mandate,” Oyedele said.
Repealing FIRS
In addition, the chairman of the presidential tax reform committee said the bill will also repeal the FIRS which in turn will be changed to the Nigerian Inland Revenue Service (NIRS), to represent its new role.
- NIRS will then be responsible for the tax collection of all federal taxes, and some States taxes too.
- Accordingly, He explained that, in practice, the FIRS has never been solely a revenue agency for the federal government but rather for the federation, as the revenue it collects is distributed across all tiers of government.
“We have the Federal Inland Revenue Service (FIRS), but look at all the taxes they collect. They are shared by the federation. Actually, the FIRS is not the revenue agency of the federal government.
“It is the revenue agency of the federation We thought an appropriate name will be Nigeria Revenue Service. We played around with federation revenue service, but it was looking too complicated,” he said.
What you should know
The federal government’s ongoing tax reform initiative began shortly after President Bola Tinubu inaugurated the Tax and Fiscal Reform Committee in August 2023, headed by renowned tax expert Taiwo Oyedele.
- The committee was mandated to overhaul Nigeria’s tax system, aiming to establish a more efficient and growth-driven structure that promotes economic development, enhances revenue collection, and improves compliance.
- Key proposals include increasing the Value Added Tax (VAT) to boost government revenue and introducing tax exemptions to provide relief for low-income earners.
- These measures are intended to tackle income inequality while ensuring a more equitable distribution of the tax burden across different economic sectors.