The House of Representatives Committee on Finance has made significant amendments to the tax reform bills submitted by President Bola Ahmed Tinubu to the National Assembly.
The committee reviewed, removed, and introduced new provisions before presenting the revised bills to the House.
During Tuesday’s plenary, the committee chairman, Rep. James Abiodun Faleke, submitted the consolidated tax reform bills following a three-day public hearing that incorporated feedback from various stakeholders.
President Tinubu had initially forwarded four tax reform bills in October 2024 for legislative review.
These include bills to regulate tax collection and distribution among federal, state, and local governments, establish a Joint Revenue Board, and consolidate existing tax laws under a unified Nigeria Tax Act.
Barring any unforeseen delays, the House is expected to begin a clause-by-clause review of the bills on Thursday.
Key Amendments: No VAT Hike, Adjustments to Inheritance Tax, Continued Funding for Agencies
One of the most contentious proposals in the original bills was the increase in Value Added Tax (VAT) from 7.5% to 10% by December 2025, with further increases to 12.5% in 2026 and 15% by 2030.
However, the committee has recommended maintaining the current VAT rate at 7.5%.
Another major revision concerns the inheritance tax. Initially, the proposal required taxation on estates left by deceased individuals.
The revised version now states that only those who inherit an estate and invest it in profit-generating businesses will be subject to tax.
Additionally, the proposed discontinuation of funding for the Tertiary Education Trust Fund (TETFUND), National Information Technology Development Agency (NITDA), and National Agency for Science and Engineering Infrastructure (NASENI) by 2030 has been overturned.
Instead, these agencies will continue receiving funding, with additional allocations to other government initiatives from the 4% development levy on company profits.
The revised fund distribution plan includes:
TETFUND: 50%
Nigerian Education Loan Fund: 3%
National IT Development Fund: 5%
NASENI: 10%
Social Security Fund: 10%
Defence Infrastructure Fund: 10%
Nigeria Police Trust Fund: 5%
National Sports Development Fund: 3%
National Board for Technological Incubation: 3%
National Cybersecurity Fund: 1%
Each agency must submit income and expenditure reports to the National Assembly for accountability.
Tax Filing and Attribution Adjustments
The committee also amended VAT filing requirements. The new provision mandates taxpayers to file VAT returns by the 21st of the following month, regardless of whether an economic activity occurred.
A key adjustment was made to the tax attribution system. Instead of attributing revenue based on a company’s headquarters, VAT derivation will now be calculated based on actual consumption. This change ensures a more balanced distribution of tax revenue across the country.
Corporate Tax Rates and Fiscalisation System Updates
Under the original proposal, company tax rates were set at 27.5% in 2025 and 25% from 2026. However, the committee recommended a flat 30% tax rate for most businesses, with companies in priority sectors—outlined in the Eleventh Schedule of the Act—being taxed at a reduced 25% during their designated priority period.
Regarding tax collection technology, the committee advised that the Nigerian Revenue Service should determine the fiscalisation system to be used, rather than mandating immediate adoption of an Electronic Fiscal System (EFS).
The agency will also outline a transition plan for implementation.
Lawmakers Praise Modifications, Say Concerns Addressed
Reacting to the revised bills, Rep. Bappah Aliyu Misau (PDP, Bauchi) noted that over 90% of concerns raised by stakeholders had been addressed.
He highlighted the removal of the proposed VAT increase, the scrapping of inheritance tax on estates, and the revision of the VAT sharing formula, which now allocates 30% based on consumption rather than the previous 60% linked to company headquarters.
Misau also applauded the restructuring of the proposed Joint Tax Board, which will now include representatives from all 36 states, alongside six executive directors representing Nigeria’s geopolitical zones.
The initial proposal had concentrated decision-making power within the chairman’s office, but the revisions ensure more balanced governance.
With these changes, the revised tax reform bills are set for further legislative review, with the House expected to begin detailed scrutiny in the coming days.