High-income earners to enjoy VAT exemption on real estate purchase – Oyedele

Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has said that high-income earners will enjoy VAT exemption on personal sales not exceeding N5 million and on the purchase of real estate.

In a recent post on X, he stated that “there is something in the tax bills for everyone”, including households and low-income earners, business owners and investors, High-Networth Individuals, and state governments.

According to him, low-income earners will enjoy an exemption from Pay-As-You-Earn(PAYE) tax on income up to N1 million annually (about N83 thousand per month). Meanwhile, those earning about N1.7 million monthly will enjoy reduced PAYE tax.

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Meanwhile, small businesses would also enjoy an exemption from company income tax and an increase in the tax exemption threshold from N25 million annual turnover to N50 million.

Companies and investors also have the option to pay taxes and levies on foreign currency-denominated transactions in Naira. Company Income Tax (CIT) will also be reduced from 30 percent to 25 percent, and multiple taxes will be harmonised.

Here is a list of the tax reform’s benefits according to Oyedele.

Households and Individuals

1. Zero percent VAT on food, healthcare, education, electricity generation and transmission.

2. VAT exemption on transportation, renewable energy, CNG, baby products, sanitary towels, rent and fuel products.

3. Tax breaks for wage awards and transport subsidies to low-income earners.

4. Tax incentives for employers to hire more people incrementally than in the previous 3 years.

5. Exemption of stamp duties on rent below N10 million.

7. PAYE tax exemption for other ranks and armed forces fighting insecurity.

9. Friendly tax rules for remote workers and digital nomads.

10. Clarity on taxation of digital assets to avoid double taxation and allow a deduction for losses.

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Small Businesses

1. No withholding tax deduction on business income of small businesses.

2. Exemption from the requirement to deduct and account for tax on payments to vendors.

3. Simplified statement of accounts attested to by small business owners for tax returns in place of audited financial statements.

4. Introduction of the Office of Tax Ombud to protect taxpayers against arbitrary tax assessments.

5. Tax disputes affecting businesses are to be resolved within 14 days by the Tax Ombudsman.

6. Harmonisation of taxes and repeal of multiple levies

7. Outlaw cash payments and physical roadblocks impose a burden on businesses.

8. Attractive tax regime to encourage formalisation of businesses and facilitate growth.

High-Income Earners and HNIs:

1. Tax exemption on personal effects not exceeding N5m, sale of a dwelling house, and up to two private vehicles.

2. VAT exemption on purchase of real estate.

3. Clarity on taxation of benefit in kind and limit of taxable accommodation benefit to 20% of annual income.

4. Exemption of tax on the sale of shares up to N150m and gains not exceeding N10m.

5. Progressive personal income tax rate of up to 25% for HNIs.

6. Tax exemption on compensation for loss of employment not exceeding N50 million.

7. Progressive VAT rate on items mostly consumed by high-income earners to partly compensate for exemption on essential consumptions.

8. Tax exemption for income earned on bonds issued by states in addition to federal government bonds.

9. Reduction in the corporate tax rate for businesses and a tax break for hiring more people.

10. Exemption of tax on bonus shares for investors in Nigerian companies.

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Subnational governments

1. Federal government to cede 5% of VAT revenue to states.

2. Transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties.

3. Repeal of the obsolete stamp duties law and re-enactment of a simplified law to enhance the revenue for states.

4. States to be entitled to the tax of Limited Liability Partnerships.

5. Tax exemption for state government bonds to be at par with federal government bonds.

6. More equitable model for VAT attribution and distribution.

7. Integrated tax administration to provide tax intelligence to states, strengthen capacity development and collaboration, and scope of Tax Appeal Tribunal to cover taxpayer disputes on state taxes.

8. Powers for AGF to deduct taxes unremitted by a government or MDA and pay to the beneficiary government.

9. Framework to grant autonomy for states’ internal revenue service and enhanced Joint Revenue Board to promote collaborative fiscal federalism.

10. Legal framework for taxation of lottery and gaming, and introduction of withholding tax for the benefit of states.