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The Senate, during its session yesterday, approved the second reading of the Tax Reform Bills—four legislative proposals designed to reshape fiscal policies. Central to the bills is the reallocation of Value-Added Tax (VAT) revenue, proposing an increase in states’ share to 55 percent and a reduction of the Federal Government’s entitlement to 10 percent.
In addition to other changes, the new tax proposals suggest scrapping VAT on exports and basic commodities and slashing company income tax from 30 percent to 25 percent, signaling a broader push for fiscal reform and economic competitiveness.
Assigned to the Committee on Finance for further consideration, the bills are set to undergo a public hearing involving all stakeholders. The committee has been tasked with resolving potential concerns and submitting its recommendations to the Senate in six weeks.
Senator Opeyemi Bamidele, the Senate Leader, brought these extensive reforms to the fore in his lead debate on the Tax Reform Bills, emphasizing their importance for economic transformation.
The Federal Executive Council (FEC) has advanced the Tax Reform Bills, which include the Joint Revenue Board of Nigeria (Establishment) Bill, 2024, the Nigeria Revenue Service (Establishment) Bill, 2024, and the Nigeria Tax Bill, 2024, as part of its legislative agenda.
The bills elicited interests among lawmakers and stakeholders across party lines, a situation that led the leadership of the Senate to invite Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele and Chairman, Federal Inland Revenue Service, Dr. Zacch Adedeji to brief its plenary.
Read also: Tax Reform Excludes Nigerians Below N1m Yearly Income
Leading debate at the plenary, Bamidele reeled out far-reaching proposals contained in the Tax Reform Bills, which according to him, aim at simplifying the tax landscape, reducing the burden on small businesses and streamlining how taxes are collected.
On tax exemptions, Bamidele pointed out that those whose salaries are not more than the minimum wage are exempted from Pay As You Earn, PAYE, deductions.
He also said small businesses with annual turnover of N50 million or less “are equally exempted from payment of taxes,” a key pro-business initiative that encourages job creation; deepens ease of doing business and incentivises more investments.
Similarly, the Senate Leader explained that there is a proposed huge reduction in company income tax from the current 30 per cent to 25 per cent that will last for at least two years.
