Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has outlined significant tax reform proposals aimed at stimulating economic growth in Nigeria.
Among the key initiatives is the elimination of Value Added Tax (VAT) on exports and essential goods, as well as the introduction of measures to reduce tax burdens on businesses.
Speaking during an interactive session with the Organised Private Sector, which was virtually monitored by PUNCH on Friday, Oyedele emphasized that the proposed reforms would foster a more competitive business environment, simplify tax compliance, and harmonize tax rules.
“The Tax Reform Bills will create a more conducive business environment by reducing the tax burden, simplifying tax rules, and harmonizing taxes,” Oyedele stated.
Among the primary reforms, small businesses will benefit from an increase in the exemption threshold for company income tax from N25 million to N50 million in annual turnover.
Additionally, these businesses will be relieved of withholding tax deductions and the requirement to submit audited financials, enabling them to file simplified statements of accounts.
“Small businesses will experience significant relief.
They will be exempt from company income tax, and their exemption threshold will be significantly increased,” Oyedele said.
In a move to streamline tax administration, Oyedele revealed plans to establish the Office of Tax Ombud, designed to resolve tax disputes within 14 days, ensuring swift and fair resolutions.
“The Office of Tax Ombud will ensure that taxpayers are protected.
Tax disputes will be resolved swiftly and fairly within 14 days,” he explained.
The tax reform bills also seek to repeal multiple levies and eliminate cash payments and physical roadblocks, further simplifying tax processes.
Oyedele assured that these reforms would not negatively impact state revenues in the medium to long term, particularly with the incorporation of e-invoicing to enhance compliance.
“The proposed model, combined with improved compliance through e-invoicing, will ensure that no state is worse off in the medium to long term.
The 5% ceded by the Federal Government can be used for stabilization transfers in the short term,” he stated.
The proposed reforms also include the elimination of minimum tax for loss-making companies, replacing it with a top-up tax for multinationals and large domestic companies.
The company income tax rate will be gradually reduced from 30% to 25% over the next two years.
Additionally, a 4% development levy will be introduced to harmonize and phase out earmarked taxes, and new incentives for business restructuring and reorganization will be introduced.
The exemption thresholds for small businesses will be further increased, based on turnover or assets.
“These reforms are crucial for fostering a more competitive and sustainable business environment in Nigeria.
By reducing the tax burden, simplifying tax administration, and ensuring fair and equitable tax distribution, we aim to stimulate economic growth and create a more prosperous nation for all,” Oyolede concluded.
Francis Meshioye, Chairman of the Organised Private Sector of Nigeria, also expressed support for the reforms, stressing the importance of involving all stakeholders to create a more conducive business environment.
“The private sector is a catalyst for sustainable economic growth.
We must maximize the benefits of these high-level interactive sessions and work together towards creating a more inclusive tax system,” Meshioye said.
Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria, highlighted the historical challenges posed by multiple taxation and uncoordinated tax collection methods.
He welcomed the proposed reforms as a crucial step toward improving manufacturers’ competitiveness.
“We have endured between 60 to 120 forms of taxes, levies, or fees at any given time for decades,” Ajayi-Kadir noted.
“These reforms are of significant importance to our profitability and competitiveness, and we hope for swift passage and full implementation,” he continued.
The proposed reforms are set to undergo further discussions, with hopes for expedited passage by the National Assembly to transform Nigeria’s tax landscape.
