Tinubu’s Tax Reform Bills and Nigeria’s economic growth

Extrapolating the fact that on Tuesday, September 3, 2024, President Bola Tinubu relayed four tax reform bills to the Nigerian National Assembly for contemplation in the aftermath of the suggestions from the Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms recommendation. The reform aims to bring a reformatory foundational development within the nation’s fiscal policy. However, Northern leaders within have kicking against the tax reform bills.

The Senate in December set up a ten-man ad-hoc committee to address litigious areas in the four tax reform bills, including the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

The most contentious clause enshrined in section 77 of the proposed Nigeria Tax Administration Bill, 2024, the legislation proposes a new VAT sharing formula; this stipulates business companies Value Added Tax (VAT) returns filing on the contention of principle of derivation by location, with this reformatory Tax Bill, states within the Nigeria federation will now be benefiting from the tax or royalties derived from the companies in each respective state where it is been accrued from accordingly, rather than principle of attribution.

Higher tax rate is detrimental to economic growth with the fact that the prices of goods and services produce within the country will skyrocket based on its higher percentage. Experts however, believe that if well-implemented, the reform would be a blessing to Nigeria.

To succinctly project President Bola Tinubu Tax Reform Bills, it will be deduced that an average Nigeria earning minimum wage would have legal right not to pay any tax. The taxation formula induced by the current President of Nigeria has made it easier for the people not to experience any burden in taxation, any Nigerian earning below eight hundred thousand naira (N800,000) would not need to pay any tax if the bill is passed into law.

However, simply put, average Nigerian salary earners will benefit from the reform as they would enjoy tax relief.

In Nigeria of today we find ourselves incapacitated in the developmental projection strides, the new Tax Reform Bill is aimed at ensuring accountability and progression in the fiscal responsibility of business owners, business owners who are earning below 25 million Naira (N25,000,000) would not need to pay any tax.

Nigeria Tax Bill is politely for business responsiveness as it negated all small business whose yearly income is below 25 million Naira (N25,000,000) from paying profit tax and progressively abridged the top rate profit tax paid by larger companies from thirty percentage (30%) to twenty-five percentage (25%). In regards to section 56 of the Nigeria Tax Bill, a small company will be taxed zero percentage (0%) which is zero-rated while other companies (medium to large) will be charged twenty-seven-point five percent (27.5%) in 2025 and twenty-five percentage (25%) from 2026. This negates the current thirty percent (30%) Company Income Tax (CIT) rate for large companies with over 100 million Naira (N100,000,000) turnover and twenty percent (20%) for medium companies with over twenty-five million Naira (N25,000,000) to one hundred million Naira (N100,000,000) turnover.