The House of Representatives has significantly altered President Bola Tinubu’s tax reform bills, significantly changing several key provisions that the executive originally proposed.
During the plenary session, Chairman of the House Committee on Finance, Rep. James Abiodun Faleke, laid before lawmakers a detailed report outlining the modifications made to the bills.
Tinubu had, in October 2024, transmitted four tax reform bills to the National Assembly for consideration and passage, but after a three-day public hearing and extensive stakeholder input, the committee has now made sweeping changes, removing some provisions and inserting new ones.
The reports presented to the House cover various aspects of taxation, including revenue collection, the restructuring of tax agencies, and changes to existing taxation laws.
The proposed legislations include the “Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States and Local Governments” (HB.1756), a bill repealing the Federal Inland Revenue Service Act to establish a new Nigeria Revenue Service (HB.1757), a bill for the creation of the Joint Revenue Board, the Tax Appeal Tribunal, and the Office of the Tax Ombud (HB.1758), and a bill to consolidate existing tax laws under the Nigeria Tax Act (HB.1759).
With lawmakers set to begin a clause-by-clause consideration on Thursday, the committee’s changes have already sparked debate, particularly concerning sensitive provisions such as Value Added Tax (VAT), the scrapping of key agencies, and the introduction of inheritance tax.
One of the most controversial aspects of the original bill was the planned increase in VAT from the current 7.5% to 10% by December 2025, 12.5% by 2026, and 15% by 2030. However, the committee has recommended maintaining the current 7.5% rate, citing economic concerns.
Another contentious provision was the introduction of an inheritance tax that would have imposed levies on estates left by deceased persons. The committee has modified this, specifying that only those who inherit and invest such estates in income-generating ventures will be taxed, rather than taxing the inheritance itself.
There were also fears that the bill would eliminate the Tertiary Education Trust Fund (TETFUND), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI) by 2030. However, the committee struck out this provision and recommended continued funding for these agencies while adding new beneficiaries to the 4% development levy fund.
Under the revised distribution, TETFUND will receive 50%, the Nigerian Education Loan Fund 3%, NITDA 5%, NASENI 10%, and several other government agencies will also receive allocations.
Changes were also made to the Nigerian Tax Administration Bill, which initially required tax authorities to issue Tax Identification Numbers (TIN) within two working days of a request. The committee extended this period to five working days and mandated that refusals must include reasons.
Further, Section 23 of the bill, which mandated the deployment of an Electronic Fiscal System (EFS) for recording and reporting all taxable transactions, has been revised. The committee now recommends that the tax authorities specify a fiscalisation system and provide a transition plan for implementation.
On corporate taxation, the original proposal set a 27.5% tax rate for companies in 2025, reducing it to 25% from 2026. The committee, however, recommended that all companies, except those in priority sectors, be taxed at 30%, with those in priority sectors taxed at 25%.
Following these modifications, lawmakers claim that over 90% of concerns raised by Nigerians have been addressed. Rep. Bappah Aliyu Misau (PDP, Bauchi) stated that contentious issues such as VAT increase, scrapping of agencies, and inheritance tax have been satisfactorily resolved.
However, despite the House’s revisions, there remains significant apprehension, particularly in Northern Nigeria, where lawmakers and governors had previously raised red flags over several provisions in the original bills. After behind-the-scenes negotiations, an agreement was reportedly reached, allowing public hearings to proceed. Some legislators, however, remain skeptical, expressing concerns about possible last-minute manipulations when the Senate begins its own review.
Beyond the National Assembly, critics warn that the bills still contain “potentially dangerous” provisions that could harm Nigeria’s federal structure and expose citizens to government overreach. A new report by the Centre for Democratic Development Research and Training (CEDDERT) identifies provisions that grant excessive powers to the President and tax authorities. One such clause, Section 75(1) of the proposed Tax Administration Bill, gives the President unilateral authority to exempt any company from taxation. The researchers argue that this provision, along with Section 75(2), which allows the President to amend or repeal tax exemptions via executive order, is unprecedented and a potential tool for corruption and favoritism.
CEDDERT also raised concerns over provisions that allow tax authorities to seize assets without court approval, a practice that has been abolished in many jurisdictions due to its potential for abuse. Section 60 empowers tax authorities to confiscate properties if a tax assessment is deemed final, with the power to sell such properties after just 14 days. Critics argue that such unchecked powers could be weaponized against political opponents and dissenting voices.
Another red flag is Section 63, which allows tax authorities to investigate individuals based on mere suspicion derived from their lifestyle. The provision, which enables law enforcement agencies to conduct financial probes without concrete evidence of wrongdoing, has been described as a tool that could be exploited for political persecution.
CEDDERT’s report warns that these sweeping powers could be used to suppress political opposition, recalling historical attempts to weaponize tax laws against political figures such as Dr. Nnamdi Azikiwe and Mallam Aminu Kano.
As the legislative process unfolds, it remains to be seen whether these controversial provisions will be amended or if the final version of the tax reform bills will retain clauses that many believe pose serious threats to democracy, federalism, and economic fairness in Nigeria. (SaharaReporters)
