The House of Representatives has retained Value Added Tax (VAT) at 7.5%, rejecting a proposed gradual increase to 15% by 2030. The House also dismissed a proposal to reintroduce inheritance tax under the guise of taxing family income.

Submitting the report during plenary in Abuja, the Chairman of the House Committee on Finance, Rep. James Faleke, stated that the report represents a comprehensive review of the bills, incorporating extensive public input.

The report covers four key bills aimed at overhauling Nigeria’s tax framework:

Nigeria Tax Bill

Nigeria Tax Administration Bill

Nigeria Revenue Service (Establishment) Bill

Joint Revenue Board (Establishment) Bill

Key Amendments in the Tax Reform Bills

Nigeria Revenue Service (NRS) Bill

Redefined Scope: The NRS will now focus on federal-level revenue collection, excluding individual taxpayers in states and the Federal Capital Territory (FCT).

Board Composition: Section 7 now requires six executive directors, each appointed by the president from the six geopolitical zones on a rotational basis. Each state and the FCT will also have a representative on the board.

Secretary Qualifications: Section 13 mandates that the Secretary to the Board must be a lawyer, chartered accountant, or chartered secretary at the level of Assistant Director or higher.

Fixed Funding Rate: The NRS will now receive a 4% cost-of-collection rate (excluding royalties), subject to National Assembly approval.

Borrowing Powers Restricted: Section 28 now requires Federal Executive Council (FEC) and National Assembly approval before the NRS can secure any loans.

Joint Revenue Board (JRB) Bill

Tax Appeal Commissioners’ Criteria Revised: Section 25 removes the requirement that commissioners must have business management experience, as the Committee deemed it irrelevant.

Strengthened Tax Ombud’s Independence: Section 43 mandates that the Tax Ombud’s Office be funded directly from the Consolidated Revenue Fund, eliminating reliance on external donations.

Independent Funding for Tax Appeal Tribunal (TAT): The tribunal will now operate independently of the Federal Inland Revenue Service (FIRS) to prevent conflicts of interest.

Stricter Adherence to the Evidence Act: New rules ensure that tax appeal proceedings strictly follow the Evidence Act.

Taxpayer Identification Number (TIN) Processing: The timeline for issuing TINs has been extended from two working days to five to accommodate administrative delays.

Faster Tax Returns for Ceased Operations: Companies ceasing operations must now file income tax returns within three months, down from six months, to prevent revenue loss.

VAT System Adjustments: Section 22 ensures that taxable supplies are attributed to their place of consumption, addressing regional imbalances.

VAT Fiscalisation System: Section 23 introduces a new regulatory framework to improve VAT collection.

Increased Reporting Thresholds for Banking Transactions:

Individuals: ₦25 million → ₦50 million

Corporate Entities: ₦100 million → ₦250 million

Judicial Oversight on Asset Seizure: Section 60 mandates that tax authorities must obtain a court order before seizing movable assets.

Mandatory Electronic Taxpayer Records Access: Section 61 formalizes the government’s right to access electronically stored tax records in line with modern practices.

New VAT Revenue Distribution Formula:

70% distributed equally among local governments

30% based on population

General Amendments Across Tax Bills

VAT Rate Maintained at 7.5% – The Committee rejected the proposal to gradually increase VAT to 15% by 2030.

Petroleum Gains Tax Reduced to 30% – Section 78 revises the tax rate on petroleum gains from 85% to 30%.

Excise Duty Provisions Removed – Excise duty-related provisions were deleted due to concerns about their negative economic impact.

Higher Turnover Threshold for Small Companies: A business will now be classified as a small company if its annual turnover is ₦100 million or less (asset cap remains at ₦250 million).

New Penalties for Virtual Assets Service Providers (VASPs): Stricter fines and potential license suspensions for non-compliant crypto and digital asset businesses.

While submitting the report, Rep. Faleke highlighted the importance of the tax reform bills in modernizing Nigeria’s tax system, boosting revenue collection, and fostering economic growth.

“These Bills are critical to implementing a modern, transparent, and efficient tax system that will support economic growth and improve revenue collection,” he said.

He added that the review process was extensive, incorporating input from the public and key government agencies, including:

Nigeria Export Processing Zones Authority (NEPZA)

National Agency for Science and Engineering Infrastructure (NASENI)

National Information Technology Development Agency (NITDA)

Tertiary Education Trust Fund (TETFund)

“We carefully examined every submission to ensure that public opinion was reflected in our recommendations. This process involved a thorough review of existing laws proposed for repeal or amendment,” Faleke noted.

The amendments impact key laws, including:

Companies Income Tax Act (CITA)

Value Added Tax Act (VAT Act)

Personal Income Tax Act (PITA)

Federal Inland Revenue Service (Establishment) Act

Petroleum Industry Act

Nigeria Export Processing Zones Act

Oil and Gas Free Trade Zone Act

The House of Representatives is expected to deliberate on the report in the coming weeks as part of its legislative process.