The House of Representatives has upheld the current Value Added Tax (VAT) rate at 7.5%, rejecting a proposed staggered increase to 15% by 2030 outlined in the Tax Reform Bills under debate at the National Assembly. The proposal for reintroducing inheritance tax, framed as taxation of family income, was also declined.
During plenary in Abuja, the Chairman of the House Committee on Finance, James Faleke, presented a comprehensive report on the bills, emphasizing that public input was carefully considered. The Tax Reform Bills consist of four key legislative proposals aimed at modernizing Nigeria’s tax system: the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill.
The Nigeria Revenue Service Bill underwent changes limiting its scope to federal-level revenue collection and ensuring equitable representation on its governing board. Funding provisions were revised to include a fixed cost-of-collection rate of 4%, while borrowing powers now require approvals from both the Federal Executive Council and National Assembly.
The Joint Revenue Board Bill introduced measures to enhance transparency, including independent funding for the Tax Appeal Tribunal and adherence to the Evidence Act during tax appeal proceedings. Provisions were made to ensure independence for the Tax Ombud’s office by removing reliance on external gifts or grants.
The Nigeria Tax Administration Bill included practical adjustments such as extending timelines for issuing taxpayer identification numbers and revising VAT systems to align taxable supplies with their place of consumption. Reporting thresholds for banking transactions were raised, and judicial oversight was reinforced for asset seizures by tax authorities.
A new VAT revenue distribution formula was approved: 50% based on equality, 20% on population, and 30% on consumption. This aims to address regional imbalances in revenue allocation.
