Senate Passes Tax Reform Bills For Second Reading

The Nigerian Senate has passed President Bola Tinubu’s tax reform bills for a second reading, marking a significant step toward overhauling the nation’s tax framework. The bills, submitted in October 2024, aim to modernize tax administration and reduce disputes.

Following a closed-door session that lasted about an hour, Senate Leader Opeyemi Bamidele (APC, Ekiti Central) introduced the debate on the four tax reform bills. The bills include the Nigeria Tax Bill 2024, providing a fiscal framework for taxation; the Tax Administration Bill, establishing a legal structure for all taxes; the Nigeria Revenue Service Establishment Bill, which seeks to replace the Federal Inland Revenue Service Act; and the Joint Revenue Board Establishment Bill, which proposes creating a tax tribunal and ombudsman.

During the debate, Bamidele emphasized the bills’ potential to simplify the tax landscape, reduce the burden on small businesses, and streamline tax collection processes. Key proposals include:

• Exempting individuals earning below the minimum wage from Pay-As-You-Earn (PAYE) taxes.
• Waiving taxes for small businesses with annual turnover below ₦50 million.
• Gradually reducing the company income tax rate from 30% to 25% by 2026 to address double taxation and promote economic growth.

Other lawmakers, including Senators Sani Musa (APC, Niger East), Seriake Dickson (PDP, Bayelsa West), and Tahir Mongunu (APC, Borno North), expressed strong support for the bills. However, Senator Ali Ndume (APC, Borno South) raised concerns about timing and issues related to derivation and VAT, suggesting a delay for further consultations.

Despite some opposition, the majority of lawmakers voted in favor, leading Senate President Godswill Akpabio to approve the second reading with a gavel strike. The bills have now been referred to the Committee on Finance, which is expected to report back within six weeks.

During the session, key members of the president’s economic team—including Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms; Zacchaeus Adedeji, Chairman of the Federal Inland Revenue Service; and Tanimu Yakubu, Director-General of the Budget Office—provided detailed explanations of the bills to the Senate.

These reforms aim to ensure uniform tax administration, eliminate double taxation, and encourage private sector investment, contributing to economic growth and increased disposable income for citizens.