Tax Reforms: 1 In 3 Workers May Be Exempted – Oyedele

Forthcoming tax reforms in Africa’s top oil producer could exclude as much as a third of the country’s working population from personal income tax, according to Nigeria’s tax czar.

A third of the working population in Nigeria currently earns 100,000 naira ($62) or less per month, according to Taiwo Oyedele, who heads a presidential committee that’s spent almost two years reviewing the country’s tax laws, reports Bloomberg. Those workers would be excluded from proposed changes to Nigeria’s tax laws, he said.

The changes aim to provide a broader tax base for the country’s government, which currently relies on proceeds from oil to fund more than half of government spending. The country’s tax take as a share of gross domestic product is one of the lowest in the world at about 11%.

“What we have done is to remove the tax completely on the lowest one-third, reduce it for those in the middle and increase it slightly for those at the top,” the former PricewaterhouseCoopers LLP executive told academics and tax officers at an event in Lagos, the commercial capital. “That’s the way to promote equity.”

The figure, in a country where more than 80 million people live in extreme poverty, has been worsened by sky-high inflation that skirted a generational high last year before falling to 24.2 per cent in March after a data revamp. High prices, and reforms that removed a fuel subsidy and devalued the currency, wiped away earnings.

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Amendments to Nigeria’s personal income tax laws were last carried out in 2011, when top earners — those with annual incomes of 3.6 million naira at the time — were in the maximum tax rate. Currently, less than 5% of Nigeria’s working population earn more than 1.7 million naira monthly ($1,060) and will be in the top tax bracket, Oyedele said.

The committee expects its quintet of laws to be in place by the last quarter of the year or early 2026. A proposal to raise value added tax from a current 7.5% to 10% this year was slapped down by lawmakers.