Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reform Committee, has disclosed that the committee has put forward a proposal for tax relief targeted at companies that are currently experiencing losses and those operating with low profit margins.
Oyedele shared this information on Monday through his X account while responding to inquiries regarding the tax reform bills.
He said that individuals in the lowest-income bracket, representing approximately one-third of the workforce, will be completely exempted from tax, while low and middle-income earners will benefit from reduced tax rates.
According to him, “Businesses have consistently cited tax issues such as multiplicity of taxes and complex tax compliance requirements as major impediments to investment and competitiveness. Addressing these issues will therefore facilitate economic growth and boost the country’s GDP.
“Some of the proposals include a reduction of the corporate income tax rate from 30 per cent to 25 per cent over the next two years and the elimination of earmarked taxes on companies to be replaced with a harmonised single levy at a reduced rate.
“Others include elimination of minimum tax on loss-making companies and those with low margins, grant of input Value Added Tax credit to businesses on assets and services to reduce cost of investment, ability to pay taxes on foreign currency transactions in naira, WHT and VAT exemptions for small businesses and a higher threshold of N50m annual turnover for corporate income tax exemption.
“There will be an office of the tax ombudsman to check administrative excesses and protect vulnerable taxpayers. In addition, their tax incentives are being rationalised with clear rules to ensure certainty and provide a level playing field for all investors, while a new priority sector incentive regime will replace the current pioneer status scheme etc.”
“This is consistent with the policy philosophy of not taxing poverty. Also, self-employed persons and entrepreneurs will enjoy tax exemptions available to individuals in formal employment. The VAT reform includes a zero rate for food, education, and health, and an exemption for rent and public transportation. These items constitute an average of 82 per cent of household consumption and nearly 100 per cent for low-income households which will ameliorate the rising cost of living for the masses,” Oyedele explained
He further noted that the proposed legislation would enable modifications to the income tax laws, aimed at promoting remote work opportunities for Nigerians engaged in the global business process outsourcing sector.
“This will empower our youths to play a key role in the digital economy space,” he noted.
The four tax reform bills submitted to the National Assembly for consideration in September have sparked controversy within the house. These include the Nigeria Tax Bill 2024, which aims to establish a fiscal framework for taxation in the country, and the Tax Administration Bill, designed to provide a clear legal framework for all taxes and minimize disputes.
Additionally, there is the Nigeria Revenue Service Establishment Bill, which seeks to repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service. Lastly, the Joint Revenue Board Establishment Bill will create a tax tribunal and a tax ombudsman.
