The House of Representatives Committee on Finance on Tuesday proposed some key changes in the provisions of the tax reform bills now being considered for passage by the National Assembly.
Specifically, the committee has modified some of the major clauses in the bills and introduced new clauses where it considered desirable for the fiscal system in the affected bills.
Presenting the committee’s report on the consolidated tax reform bills to the House during plenary, the chairman, Hon. Abiodun Faleke, said the presentation was sequel to the conclusion of a three-day public hearing on the bills and the subsequent review of the memoranda and inputs by various stakeholders during the hearing.
The amended draft bills presented by the committee to the House include The reports presented to the House include a “Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States and Local Governments; Prescribe the Powers and Functions of Tax Authorities, and for Related Matters (HB.1756) ” (Referred: 12/2/2025).
“A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No.13, 2007 and Enact the Nigeria Revenue Service (Establishment) Bill to Establish Nigeria Revenue Service, charged with Powers of Assessment, Collection of, and Accounting for Revenue Accruable to the Government of the Federation and for Related Matters (HB.1757)” (Referred: 12/2/2025).
“A Bill for an Act to Establish Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombud, for the Harmonisation, Coordination and Settlement of Disputes arising from Revenue Administration in Nigeria and for Related Matters (HB.1758) and a “Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide For Taxation of Income, Transactions and Instruments, and for Related Matters (HB.1759).”
On the VAT hike proposal by the Executive, the committee recommended sundry changes to the proposed bills and recommended to the House for clause-by-clause consideration before the passage.
Some of the changes made to the bills by the committee include the clauses that had to do with increase in VAT rate, scrapping of TETFUND, NITDA and NASENI, modification of inheritance tax, VAT derivation and distribution formula, among others.
While the Executive had proposed in section 146 that VAT should be increased from the current 7.5% to 10% by 31st December, 2025; 12.5% from January 2026 to December 31st 2029 and to 15% from January 2030 upwards, the committee recommended that the current 7.5% VAT rate should be retained.
In addition, the committee also modified the inheritance tax clause, which proposed that an estate left by a deceased would be taxed, to reflect that whoever inherits such estate or part of it as an heir and invests it in business yielding returns will now be taxed.
Similarly, the committee modified Section 59 of the Nigerian Tax Bill, which proposed to stop the funding of TETFUND, NITDA and NASENI by 2030, and now proposed that the funding should continue, while recommending additional agencies to benefit from the 4 % development levy fund.
This is even as the Hon. Faleke-led committee also recommended that the fund accruing from the 4% development levies imposed on the assessable profits of all companies should be distributed as follows: (a) Tertiary Education Trust Fund, 50%; (b) Nigerian Education Loan, 3%; (c)National Information Technology Development Fund, 5%; and (d) National Agency for Science and Engineering Infrastructure, 10%.
Other distribution ratio recommended by the committee include Social Security Fund, 10%; Defence Infrastructure Fund, 10%; Nigeria Police Trust Fund, 5%; National Sports Development Fund, 3%; National Board for Technological Incubation, 3%; and National Cybersecurity Fund, 1%.
The committee recommended to the House that for the purpose of this section, every beneficiary Agency and Fund in subsection (3) shall be required to prepare and submit their income and expenditure to the National Assembly for appropriation
While Section 22 of the bill proposed that “a taxable person shall, in respect of Value Added Tax (VAT), with or without a notice and whether or not an economic activity has taken place, submit a return to the Service in the prescribed form, by the date specified in subsection of this section or in a regulation issued by the Service for that purpose, the committee recommended that “a taxable person shall, in respect of Value Added Tax (VAT), with or without a notice and whether or not an economic activity has taken place, submit a return to the Service in the prescribed form, on or before the 21st day of the following month.”
On VAT attribution irrespective of location, while the Section 22 (12) of the submitted bill proposed that “for the purpose of attribution, any return under this section shall provide details of derivation of taxable supplies by location in a manner prescribed by the Service”, the committee recommended: “For the purpose of attribution, any return under this section shall provide details of consumption of taxable supplies, irrespective of where the return is filed.”
In Section 7(2) of the Nigerian Tax Administration Bill which proposed that “where a relevant tax authority refuses to register or issue a Tax ID upon request under subsection (1) of this section, the relevant tax authority shall, within two working days of the decision, notify that person of the refusal. However, the committee recommended that “where a relevant tax authority refuses to register or issue a Tax ID upon request under subsection (1) of this section, the relevant tax authority shall, within five working days of the decision, notify that person of the refusal with reasons.
A further analysis of the modifications mad by the committee on the Tax Reform Bills indicated that on fiscalisation, Section 23 of the bill proposed that where the Service deploys an Electronic Fiscal System (EFS) any person making a taxable supply shall use the EFS for recording and reporting all supplies.
The Section also proposed that the Service may prescribe technical specifications and security standards for using the EFS to record and report supplies, adding that taxable persons shall be responsible for maintaining accurate records of all transactions passing through the EFS.
However, the committee recommended that “the Service shall specify the fiscalisation system to be adopted and a transition arrangement for its implementation” and that (1) “where the Service deploys an Electronic Fiscal System (EFS), any person making a taxable supply shall use the EFS for recording and reporting.
“Taxable persons shall be responsible for maintaining accurate records of all transactions passing through the EFS and that the Service shall specify the fiscalisation system to be adopted and a transition arrangement for its implementation”, the committee added.
Section 27 proposed that “every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns as specified in the regulation issued for that purpose.
“Every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns to the appropriate tax authority, as specified in the regulation issued for that purpose.
Similarly, Section 56 of the Nigerian Tax Bill proposed that “Companies shall be levied, for each year of assessment in respect of total profits of every company, in the case of— (a) a small company, at zero per cent; and (b) any other company, at the rate of– (i) 27.5% in 2025 year of assessment, and (ii) 25% from 2026 year of assessment.”
However, the committee recommended that tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of— (a) a small company, at zero percent; and (b) any other company, save for companies in subsection (2) of this section, at the rate of 30 per cent, and that companies operating in priority sectors as contained in the Eleventh Schedule of this Act shall be subject to income tax at the rate of 25 per cent, during the priority period.
