The tax reform bills introduced by President Bola Tinubu have come closer to passage in the House of Representatives following yesterday’s consideration and adoption of the report of the Committee on Finance.
With the adoption of the report, the House is expected to pass the four tax bills – Nigeria Tax; Nigeria Tax Administration; Nigeria Revenue Service and Joint Revenue Board of Nigeria (Establishment) Bills, 2024 for third (final) reading in the coming legislative sittings.
The report showed that the House Committee on Finance, chaired by Hon. James Faleke, amended some controversial provisions in the tax bills to incorporate some concerns raised by stakeholders at the recently held public hearing.
Accordingly, the Value Added Tax (VAT) is maintained at the current rate of 7.5% unlike the proposed increase in the Nigeria Tax Bill and stakeholders suggestion for a reduction to 5%.
For VAT purposes, a new basis for the distribution of the 55% and 35% respectively for state and local government allocation had been introduced.
For states, 50% will be distributed equally, 20% based on population, and 30% based on consumption.
“Emphasis has also been placed on the actual place of consumption irrespective of where the returns are filed,” the report stated.
The House also approved a recommendation to reinstate contributions to NASENI and NITDA and a call to ensure continuous funding from the Development Levy.
It further approved the deletion of the proposed re-introduction of inheritance tax under the guise of taxation of family income, as it oversteps divine jurisdiction which placed inheritance matters within the scope of the Sharia and Customary Laws of the North and South respectively.
Further amendments/recommendations adopted include; removal of the provisions purporting to delete the exemption and incentive clauses of the NEPZA and OGFZA Act; to revert to the current provisions of the NEPZA and OGFZA Act, as well as the current practice of the enterprises within the free zone entities.
“Alternatively, a proposal to provide for a moratorium period of 10-15 years to allow for free zone entities to transition into the new proposed regime. Call for exemption of free zone entities from the new effective tax rate regime.
“Proposal to reinstate the exemption status of profits from manufactured exports to encourage manufacturers and help boost non-oil export earnings for the country. Proposal for inclusion of the provisions of the 2024 Executive Orders, for oil and gas operations, in the Bill,” the adopted report stated.
Moreso, the lawmakers approved one representative from the 36 states in the Board of the proposed Nigeria Revenue Service while power to distrain conferred on the ‘Service’ is to be subject to a valid court order.
For the Joint Revenue Board (Establishment) Bill, the House approved the creation of a Tribunal Fund into which 2% of non-oil revenue will be paid to guarantee uninterrupted and adequate funding. It also scrapped the newly created Office of the Ombud to the Tribunal as the former creates an additional layer of costs without proportional benefits and leads to overlapping jurisdictions between the two bodies.
