Periscoping The Tax Reform Bills (1)

The Tax Reform Bills, presented by President Bola Ahmed Tinubu to the National Assembly for passage since October, 2024, have continued to stir hot debates both at the National Assembly and within the wider Nigerian society. A quartet of presidential proposals comprising; the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill; the bills present the most audacious overhauls in revenue collection laws ever proposed in Nigeria. The Nigeria Tax Bill (NTB) promises to be a comprehensive piece of single legislation that streamlines tax administration in the country.
Currently, national taxes and revenue collections are being administered through more than 11 different direct/indirect laws, and collected through numerous agencies, often times without inter-agency co-ordination, transparent accountability and timely remittances. Recent reports exposed a recurrent setback of the status quo, when in January, 2025, the Federal Accounts Allocation Committee (FAAC) accused the Nigerian National Petroleum Company Limited (NNPCL) of withholding N13.763 trillion. According to FAAC, out of the N27.28 trillion payable to the federation accounts from sales of domestic crude between 2012 and 2024, only N13.524 trillion had been remitted, leaving a balance of N13.763 trillion. Such accusations are weighty, and no doubts, justify the need to streamline revenue collections in the country.
Going by its current proposal, the NTB aims to repeal 11 prevailing laws – Capital Gains Tax Act, Casino Act, Companies Income Tax Act, Deep offshore and Inland Basin Act, Industrial Development (Income Tax Relief) Act, Income Tax (Authorised Communications) Act, Personal Income Tax Act, Petroleum Profits Tax Act, Stamp Duties Act, Value Added Tax Act and Venture Capital (Incentives) Act. These repeals would trigger a cascade of consequential amendments on numerous other enactments, encompassing the Petroleum Industry Act, the Nigerian Export Processing Zones Act, the Oil and Gas Free Trade Zone Act, the Petroleum (Drilling and Production) Regulations of 1969, the National Information Technology Development Agency Act, the Tertiary Education Trust Fund (Establishment) Act, the National Agency for Science and Engineering Infrastructure (Establishment) Act, the Customs, Excise Tariffs, Etc. (Consolidation) Act, the National Lottery Act, the Nigerian Minerals and Mining Act, the Nigeria Start-up Act, the Export (Incentives and Miscellaneous Provisions) Act, the Federal Roads Maintenance Agency (Establishment, Etc.) Act, and the Cybercrime (Prohibition, Prevention, Etc.) Act.
A key reality is that NTB’s axing blows would scrap the laws that established Federal Inland Revenues Service (FIRS), and in its place establish the Nigeria Revenue Service (NRS). The NTB proposes vesting upon the NRS, unlike in the FIRS, the powers to collect all taxes in Nigeria, including excise and import duties currently reserved for the Nigerian Customs Service, and oil revenue royalties which presently is the exclusive privilege of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The NTB would be empowering the NRS with a supremacy clause which provides in part that, “this Act shall take precedence over any other law with regard to the imposition of tax, royalty, levy, excise duty on services or any other tax. Where the provisions of any other law is inconsistent with the provisions of this Act, the provisions of this Act shall prevail and the provisions of that other law shall, to the extent of the inconsistency, be void.”
If passed, the emergent laws would have far-reaching reverberations across revenue generating and collecting interests across Nigeria. The new laws would phase-out or drastically shrink the powers of institutions that by their strong-holds on the proceeds of national resources, had detected the pace of the Central Bank of Nigeria and even those of governments. Proponents of the tax laws say the new reform is to increase revenue collection efficiency and reduce collection costs, considering that revenue agencies deduct commissions as collection charges even as their staff are employees of government, paid salaries for same job. However, the closing of every economic order may create losers and usher-in new set of winners. It is therefore no wonder that the tax reform bills have continued to generate much heated debates in Tinubu’s administration than no others.
Worrisome however, is the trend of the ensuing arguments which, tending towards a rather North Vs South polarising dimension, have concentrated solely on the sharing formular for Value Added Taxes (VATs), while politicians appear to be neglecting numerous other issues that bear more on the generality of Nigerians. It is also disappointing that much attention is not being paid to the blocking of revenue collection loopholes. How that Nigeria’s commonwealth is equitably harnessed and distributed to care for every Nigerian, should have been the crux of revenue arguments. As the NTB proposes a progressive VAT that would jump from 7.5per cent to 10per cent in 2025, then to 12.5per cent from 2026 to 2029, and culminate to 15per cent in 2030, it implies there is no plan to tame the current inflation burdens currently inflicting Nigerians…. (To be continued)

Joseph Nwankwor