The Nigeria Extractive Industries Transparency Initiative (NEITI) has expressed strong support for President Bola Tinubu’s Tax Reform Bills, while urging for greater clarity and improvements in certain provisions to ensure effective implementation.
In a statement signed by the Acting Director of Communications and Stakeholders Management, Obiageli Onuorah, NEITI emphasized the importance of aligning the proposed reforms with global best practices and addressing gaps to enhance fiscal transparency and efficiency.
Support for the Tax Reform Bill
NEITI described the draft bill, submitted to the National Assembly for approval, as having the potential to modernize Nigeria’s tax system and broaden the tax base.
Dr. Orji Orji, NEITI’s Executive Secretary, remarked, “The Bill has the potential to modernize Nigeria’s tax system, streamline and broaden its administration and tax base to align with global best practices.”
The agency noted the bill’s emphasis on consolidating legal frameworks, taxing digital assets, addressing resident and non-resident taxation, and combating tax evasion. NEITI also acknowledged the public interest in the proposed reforms, which underscores the need for transparency and trust in its implementation.
Recommendations for Improvement
NEITI outlined several recommendations in a memo sent to the National Assembly and the Presidential Committee on Fiscal Policy and Tax Reforms.
Harmonization of Tax Laws
While commending the bill’s intent to unify tax legislation across federal and state levels, NEITI noted the absence of explicit guidelines for harmonizing these laws.
“Sections 1 and 2 aim to ensure unified tax legislation across Nigeria but lack explicit guidelines to harmonize federal and state tax laws or clarify the roles of subnational governments,” the agency stated.
Digital Assets Taxation
NEITI endorsed the provision for taxing digital assets, aligning with global practices, but called for clear definitions of taxable assets, valuation guidelines, and exemptions for small businesses to support growth.
Extractive Industries
On issues related to oil, gas, and mining industries, NEITI recommended:
Reducing hydrocarbon tax rates for smaller operators to encourage participation.
Expanding incentives for carbon capture and renewable energy projects to support energy transition goals.
Addressing gaps related to partnerships and joint ventures in petroleum operations to promote fairness and accountability.
Tax Relief and Incentives
The agency suggested expanding exemptions under tax incentives to include renewable energy and sustainability projects. It also recommended simplified application procedures and targeted incentives for sectors like climate change mitigation and renewable energy development.
Capacity Building and Compliance
NEITI called for investments in capacity building for tax administrators, adoption of digital tax tools, and simplified compliance processes to reduce burdens on small businesses and mitigate VAT evasion.
Double Taxation Relief and Dispute Resolution
NEITI recommended establishing tax tribunals for dispute resolution and introducing reduced tax rates or exemptions for priority sectors to encourage investment.
Stakeholder Engagement and Implementation
The transparency agency urged robust engagement with civil society and other stakeholders to build trust and awareness around the reform bill. “Given its experience in relationship management and goodwill, NEITI offered to lead engagements with the third sector on the reform bill,” the statement added.
Conclusion
NEITI reaffirmed its support for the tax reform initiative, stressing that effective implementation would significantly boost revenue generation, job creation, and economic opportunities. It called for a careful transition process and public awareness campaigns to avoid administrative confusion.
The agency underscored the importance of collaboration between federal, state, and international tax authorities to ensure the reforms achieve their intended objectives.
