The federal government has disclosed plans to reduce corporate income taxes from 30 per cent to 25 per cent in a drive to lessen the burden of taxation on companies.
The government announced that it has commenced the process of raising the personal income tax of high-income individuals – earning up to N100 million monthly – to 25 per cent, with that earning from N1. 5 million to now pay 19 per cent as income tax while those earning below N1 million monthly would be exempted from the personal income tax regime.
In that same breath, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed Monday at the 30th Nigerian Economic Summit in Abuja with the theme
“Collaborative Action for Growth Competitiveness and Stability.”
Oyedele said the executive arm has commenced the process with an executive bill to the National Assembly for legislation. If passed into law, the new tax reforms are expected to take effect from January 2025.
“We just need to figure out who is bearing the burden, it might be shareholders, might be employees, might be the ordinary man on the street,” Oyedele told a plenary session at the ongoing summit on Monday.
“So we have been very intentional in reducing the tax burden of businesses.
One of it is, today whatever VAT you pay on assets, whether you are building a factory or buying a laptop, on buying vehicles, you bear IT. As a business, of course, it increases your cost and therefore your pricing will go up. Once our reforms are implemented, you get the credit back 100% on services and on assets.
“Your corporate income tax rate will come down from 30 per cent to 25 per cent. That’s also huge.
So and then we also have personal income plans as what we model is that many people in this room do not like this one, because there are rich people in the room, If you earn N1.5 million in a month or less, your personal income tax bill will go down, of course, at the lower end, completely exempted But if you end more than that amount, you see it going up incrementally, up to 25 per cent.
“Today, if you earn N100 million a month, the effective personal income tax rate.
We’re taking that up to 25 per cent for the rich people But that’s because we need to balance the book,” Oyedele stated.
In reforming the tax process, the government classified all taxes on businesses, including direct taxes on businesses as indirect taxes.
The chairman of the tax committee said the government is going ahead to significantly reduce or remove taxes on food, other household items, health, education, accommodation and transportation which costs Nigerians about 82 per cent of their total expenses.
He said the government is not going to make Nigerians pay more taxes, increase the rate, or introduce new ones.
Oyedele described the Nigerian tax system as progressing but failed to assure that taxpayers would be given the demanded incentives. “We actually think that the biggest low-hanging fruit is removing its incentives the good thing about it is
It would not cost the government its money but it would be a huge relief for the business sector and that’s exactly what we are doing,” he added.
Meanwhile, the Central Bank of Nigeria (CBN) has mandated commercial banks in the country to ensure that they have efficient electronic e-channels through the institution of very robust cybersecurity measures in place.
Speaking at the forum, the governor of the CBN, Yemi Cardoso said several innovations have been introduced into the banking industry, especially in the area of e-channels and more. “So any bank today that is not very feasible in the area of e-channels, of course, will have itself to blame,” Cardoso, who was represented by his deputy, stated.
He said the bank’s drive for deeper financial inclusion is to engender confidence in the banking sector and increase the number of new entrants into the banking space.
“So at our end, we keep telling the operators we want a very robust risk management process system in place. At the same time, we want them to develop very strong cyber security around their operations. So because new teams and innovation are evolving, we want you also to prepare,” the governor stated.
