The Senate yesterday resumed its debate on the Tax Reform Bills, a set of four legislative proposals to increase value-added tax (VAT) distributable to the subnational governments to 55 per cent while reducing the federal government’s share to 10 per cent.
The new legislative regimes also proposed zero VAT on exports and essential consumptions by the masses and grant of input VAT credit on assets and services in addition to goods consumed by businesses to lower the cost of production.
These far-reaching initiatives were contained in the lead debate of Senate Leader Opeyemi Bamidele on the Tax Reform Bills.
The Federal Executive Council had proposed the Tax Reform Bills comprising the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024 and Nigeria Tax Bill 2024.
The bills elicited spirited interests among key lawmakers and stakeholders across party lines, a situation that informed the leadership of the Senate to invite the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee Taiwo Oyedele and the Chairman of the Federal Inland Revenue Service Zacch Adedeji to brief the National Assembly.
Leading debate at the plenary, Bamidele reeled out far-reaching proposals contained in the Tax Reform Bills, which according to him, aim at simplifying the tax landscape, reducing the burden on small businesses and streamlining how taxes are collected.
In the area of tax exemptions, Bamidele pointed out that those, whose salaries are not more than the minimum wage from Pay As You Earn (PAYE) deductions, would be exempted from the tax regime.
He also said small businesses with annual turnover of N50 million or less “are equally exempted from payment of taxes,” a key probusiness initiative that encourages job creation; deepens ease of doing business and incentivises more investments. Bamidele explained that there was a proposed huge reduction in company income tax from the current 30 per cent to 25 per cent that would last for at least two years.
He said: “As part of a deliberate attempt to curtail the incidence of double taxation and multiplicity of taxes and levies, multiple taxes hitherto paid by companies under various tax heads namely 2.5 per cent education tax, 0.25 per cent NASENI tax have been harmonized into a development level of 2 per cent which by 2030 will be applied to fund the newly established student loan scheme which will benefit many Nigerian youths.
