The federal government has continued to defend the exigency of the tax reform bills while key stakeholders pickled in the proposed legislation.
Both divisions advanced their positions at the public hearing on the tax reform bills—Nigeria Tax, Nigeria Tax Administration, Nigeria Revenue Service, and Joint Revenue Board of Nigeria (Establishment) Bills, 2024—organised by the House of Representatives Committee on Finance on Thursday.
The chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, insisted that the inheritance tax would not be reintroduced in the new tax bills before parliament for consideration.
Oyedele said this in reaction to submissions that inheritance tax had been reintroduced during a hearing on the four tax reform bills.
He said, “So the section of the law being interpreted as introducing inheritance tax is section 4 subsection 3 of the Nigerian tax bill. Now, this section is talking about family income.
“If, as an individual, you own a property and you rent it out, you pay tax on your rent. But a family can also own a house and rent it out. Should they not pay tax? If we say they should not pay tax, I guarantee that all the houses in Nigeria will turn into family houses, and nobody will pay the tax.
“Income is different from inheritance. Inheritance has to do with assets, wealth, and cash. In accounting, income is external to the family when you say income. It comes in from the outside. So, this provision is not even new. It has been in our tac laws since independence.
“As we speak today, this provision is in the Personal Income Tax Act, Section 2, subsection 5. If you have family income, you can tell us it belongs to the father or the son. The father or the son will pay the tax. But if you earn family income and cannot attribute it to any family member, you would impose tax on that family.
“There’s a tax on villages. There’s a tax on communities. You can have a community town hall and rent it out. You need to pay tax. So, this provision is not new. Also, it does not introduce inheritance tax in any way.
“Otherwise, this law was already in place when, in 1979, the military introduced inheritance tax. If this were sufficient, they would not have introduced another law to impose inheritance tax.
“And in 1996, that capital transfer tax that imposed inheritance tax was repealed. And we have not in any way, directly or indirectly, attempted to bring it back. And by the way, this is the state’s income, not the federal government’s. Why would we want to do that?”
For his part, Zach Adedeji, chairman of the Federal Inland Revenue Service (FIRS), faulted a situation where investors produce in free zones with different tax systems and try to get their products into custom areas.
“No responsible government will open its eyes and allow some people that have not read the law or read it halfway to now say they want to have litigation; they want to go out of the country.
“What is the total investment that they want to use to destroy those people that are in the customs area that we are collecting taxes from, and then you produce, and you rush it, you dump it into the Customs area to destroy the country. A responsible country will not be like that. We will not be like that,” he said.
Adedeji described the allegations by some stakeholders in the free zones that 70 of the investors had withdrawn their cash due to unfavourable policies as false.
He said, “There is what we call cash in circulation. That’s the currency you have in your pockets and your wallet. In Nigeria, it’s about four trillion naira. It’s meant to be outside the banking system. That’s what they used to pay for more or to buy pure water.
“The most supply in Nigeria is over 100 trillion Naira. And it’s still there. The value of digital transactions last year was N1.08 quadrillion. So nobody’s withdrawing money to run from Nigeria.
Also speaking, Francis Meshioye, president of the Manufacturers Association of Nigeria, expressed worry that the tax bill excluded tax waivers on profits from manufactured exports.
Meshioye said between 2019 and 2023, the value of manufactured exports deteriorated from $6.7 billion to $1.6 billion, partly due to inadequate incentives for our exporters.
He also opposes the idea of allowing 100 percent sail into the Export-Free zones, saying no country except Nigeria allows such sail and adding that Ghana only allows 30 percent.
The association proposed that the law allow only 25 per cent of goods to sail into the free zone.
The Oil Producers Trade Section of the Lagos Chamber of Commerce said that if the tax bills are passed as currently drafted, some of the VAT gains for the oil and gas sector will be lost, especially concerning petroleum profit tax.
Representative of the group said the incentives for oil production should be codified under the proposed tax reform, adding that if section 87 of the bill is allowed, a stabilisation fund will not be available for companies currently captured under the Petroleum Industry Act, adding that in such situation, when anything happens, they will be on their own.
The representative said that when passing the bills, care must be taken not to increase the cost of doing business in the country so that businessmen are not pushed into investing in other countries.
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