…Retains VAT at 7.5%, with a significant shift allowing VAT input on all items—including fixed assets, overhead costs, and administrative services

…Retention of company income tax at 30%

By Henry Umoru, ABUJA

The Senate has passed the remaining two of the four tax reform bills, the Joint Revenue Board and Nigeria Tax Bills submitted by President Bola Tinubu in October 2024.

The two bills that were read the third time and passed yesterday were the conclusion of the Senate’s legislative consideration of the executive-backed tax reform bill aimed at overhauling Nigeria’s fiscal system.

Following the fact that the committee reports were presented for consideration by the Chairman, Senate Committee on Finance, Senator Sani Musa, APC, Niger East, the Senate yesterday commenced detailed review in the Committee of the Whole.

The President of the Senate, Godswill Akpabio, had on Wednesday announced that the remaining two bills would be taken on the next legislative day following the passage of the first two, Nigeria Revenue Service (Establishment) Bill and the Nigerian Tax Administration Bill.

At yesterday’s consideration, Senators went straight into the clause-by-clause consideration of the remaining two bills, culminating in their passage.

Key provisions and highlights: Nigeria Tax Bill: This bill consolidates multiple tax laws and introduces several reforms, including: Retention of VAT at 7.5%, but with a significant shift allowing VAT input on all items—including fixed assets, overhead costs, and administrative services.

According to Senator Musa, this is intended to lower operational expenses for businesses, adding, “Consequential amendments to the Petroleum Industry Act (PIA) to transfer fiscal administration duties—such as royalty and petroleum profit tax collection—to the newly proposed Nigeria Revenue Service (NRS). The committee clarified that other provisions of the PIA remain unaffected.

“Introduction of a N5 million fine for unauthorised disclosure of institutional information, aimed at strengthening data privacy and administrative discipline. Retention of company income tax at 30%.”

According to him on joint Revenue Board (Establishment) Bill, “This bill creates a formal framework for coordination between federal and state tax authorities. It seeks to:Harmonise tax policies across tiers of government.Reduce instances of multiple taxation and overlaps between federal and subnational jurisdictions.

“Improve taxpayer compliance by streamlining administration and aligning standards.

“The committee also retained the development levy funding framework to sustain strategic agencies. Under this formula: 50% of funds go to TETFUND, 15% to the Nigerian Education Loan Fund, 10% each to NITDA and NASENI, 5% to the National Cybersecurity Fund, and 10% to the Defence Security Fund.

Meanwhile, the Senate has set up a 15 member harmonisation Committee with Senator Yahaya Abdullahi, PDP, Kebbi as Chairman to work with the House of Representatives in order to come up with an agreeable document for President Bola Tinubu’s assent.