The Nigerian Senate on Wednesday passed two of the four Tax Reform Bills being deliberated upon by it as part of the current efforts of the Federal Government to holistically amend the provisions of most of the existing laws to enhance the efficiency of the nation’s tax system.
The bills passed by the Upper Chamber of the National Assembly were the Nigeria Tax Administration Bill 2024 and the Nigeria Revenue Service (Establishment) Bill 2024 while deliberations on two other bills, namely the Nigeria Tax Bill 2024 and the Joint Revenue Board (Establishment) Bill 2024, are expected to be continued today for passage.
Announcing the passage of the two bills, the Senate President, Sen. Godswill Akpabio, said the two bills following a majority voice vote by the senators, adding, however, that a harmonisation committee will be set up to harmonise the provisions of the Senate’s version of the bills with the same bills passed by the House of Representatives in March.
According to him, the bills when signed by the President will enhance Nigeria’s tax collection and distribution structure and promised that Senate would soon finalise the deliberations of the other pending bills.
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Akpabion assured: “These bills will add immense value to governance and transform how taxes are collected and shared in Nigeria. We are committed to concluding the outstanding bills tomorrow, even if we have to stay here until 10 p.m.”
Earlier, the Chairman of the Senate Committee on Finance, Sen. Sani Musa, while presenting the committee’s report said the proposals had been thoroughly scrutinised, including through public hearings conducted over the past months.
The lawmaker explained that over 64 organisations, including civil society groups, participated in the hearings and most supported the reforms.
According to him, on the VAT sharing formula, the committee recommended 10% for the federal government, 55% for states and the Federal Capital Territory, and 35% for local governments.
Musa clarified that the VAT allocation to states would be distributed based on equality (50%), population (20%), and place of consumption (30%), while local government allocations would be split 70% on equality and 30% on population.
The committee also proposed that 10% each be earmarked for TETFund, NASENI, and NITDA, 5% for cybersecurity, and 10% for security and defence.
The lawmaker urged the Senate on the passage of the bills, stressing that the passage will encourage tax compliance, stimulate the economy, and increase investor confidence in the economy.
In his contribution, Sen. Abdullahi Yahaya, who is a member of the Special Committee on Tax Reform, confirmed that the committee’s report had been merged with the Finance Committee’s recommendations.
After a clause-by-clause deliberation on the committee’s report, the Senate adopted the retention of the current 7.5% VAT rate
In addition, the lawmakers amended Clause 22 to allow states to establish their own Revenue Tax Boards and approved that 2% of the total revenue collected by the Nigeria Revenue Service be appropriated by the National Assembly.
The percentage, which initially was proposed at 3%, was reduced following Sen. Aliyu Wadada’s argument that 3% would amount to a revenue pool greater than the budgets of 16 states combined.
The Senators also debated on some clauses, including Clauses 4 and 39, and agreed that the clauses should be modified to avoid implementation challenges.
In his closing remarks, the Senate President commended the Finance Committee and the senators for their thorough work on the tax reform bills.
