Wealthy Nigerians earning over N100 million per month may soon face a 25% personal income tax if a new bill proposed by the Federal Government is passed by the National Assembly.
This was disclosed by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, during a breakout session at the 30th Nigeria Economic Summit in Abuja.
Oyedele emphasized that the proposed reforms aim to create a more equitable tax system, stating that 90% of current taxpayers are individuals who should not be taxed. “If you earn N100 million a month, we are taking up to 25 percent from the rich people. That’s because we need to balance the books,” he said, highlighting the need for wealthier citizens to contribute more to government revenue.
He added that the reforms are expected to take effect in January 2025, pending approval from lawmakers. Middle-income earners making N1.5 million or less per month would see a reduction in their personal income tax, while higher earners would face incremental increases, eventually reaching the 25% threshold. Lower-income earners would be exempt from personal income tax altogether.
The reforms also aim to alleviate the tax burden on businesses. “Today, whatever VAT businesses pay on assets—whether building a factory or buying equipment—they bear it.
This increases costs and prices. Once our reforms are implemented, businesses will get 100% credit back on services and assets,” Oyedele explained.
Addressing the informal sector, he revealed that 97% of those working informally would be formally exempted from taxes, as many are simply “trying to survive.” He stressed that the committee is working to ensure that the right individuals are brought into the tax bracket, using data and identification systems to achieve this goal.
Other proposed changes include a reduction in the corporate income tax rate from 30% to 25%, which Oyedele described as a significant relief for businesses. Additionally, essential goods and services such as food, health, education, accommodation, and transportation could see reduced or eliminated VAT, easing the financial burden on lower-income households.
However, for other goods and services, VAT rates may increase to balance government revenues.
Oyedele also noted that inflation had already acted as a “disorderly tax,” diminishing the value of money for many Nigerians without the need for legislation.
On tax incentives and waivers, Oyedele warned against indiscriminate giveaways, stating, “We cannot give all the incentives you are asking for.
The biggest low-hanging fruit is removing unnecessary incentives, and that’s exactly what we are doing.”
The proposed reforms aim to streamline the country’s tax system, increase government revenues, and create a fairer structure that benefits lower-income earners and businesses while ensuring that high earners pay their fair share.
