The Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has revealed that the panel has proposed tax relief for companies making losses and those with low margins.
Oyedele disclosed this on Monday via his X handle as he answered questions about the tax reform bills.
Some of the companies listed on the Nigerian Exchange Limited have been reporting losses due to the devaluation of the naira, which has impacted their foreign exchange exposure.
Oyedele said, “Businesses have consistently cited tax issues such as multiplicity of taxes and complex tax compliance requirements as major impediments to investment and competitiveness. Addressing these issues will therefore facilitate economic growth and boost the country’s GDP. Some of the proposals include a reduction of the corporate income tax rate from 30 per cent to 25 per cent over the next two years and the elimination of earmarked taxes on companies to be replaced with a harmonised single levy at a reduced rate.
“Others include elimination of minimum tax on loss-making companies and those with low margins, grant of input Value Added Tax credit to businesses on assets and services to reduce cost of investment, ability to pay taxes on foreign currency transactions in naira, WHT and VAT exemptions for small businesses and a higher threshold of N50m annual turnover for corporate income tax exemption. There will be an office of the tax ombudsman to check administrative excesses and protect vulnerable taxpayers. In addition, their tax incentives are being rationalised with clear rules to ensure certainty and provide a level playing field for all investors, while a new priority sector incentive regime will replace the current pioneer status scheme etc.”
For individuals, Oyedele revealed that the lowest-income earners accounting for about one-third of all workers will be fully exempted from tax while low and middle-income earners will pay less.
“This is consistent with the policy philosophy of not taxing poverty. Also, self-employed persons and entrepreneurs will enjoy tax exemptions available to individuals in formal employment. The VAT reform includes a zero rate for food, education, and health, and an exemption for rent and public transportation. These items constitute an average of 82 per cent of household consumption and nearly 100 per cent for low-income households which will ameliorate the rising cost of living for the masses,” Oyedele explained.
He added that the proposed laws would allow changes to be made to the income tax laws to facilitate remote work opportunities for Nigerians in Nigeria within the global business process outsourcing.
“This will empower our youths to play a key role in the digital economy space,” he noted.
The four tax reform bills sent to the National Assembly for consideration in September have seen lawmakers divided.
The bills are the Nigeria Tax Bill 2024, which is expected to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country and reduce disputes.
Others are the Nigeria Revenue Service Establishment Bill, which will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.
