By Oluwadara Akingbohungbe
Extrapolating the fact that on Tuesday, September 3, 2024, President Bola Tinubu relayed four tax reform bills to the Nigeria National Assembly for contemplation in the aftermath of the Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms recommendation, these aims to bring a reformatory foundational development within the Nigeria federation fiscal policy, however, Northern leaders within the nation have been yearning for reversal of the Tax reform bills
The Senate in December set up a ten-man ad-hoc committee to address litigious areas in the four tax reform bills, including the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
The most contentious clause enshrined in section 77 of the proposed Nigeria Tax Administration Bill, 2024, the legislation proposes a new VAT sharing formula; this stipulates business companies Value Added Tax (VAT) returns filing on the contention of principle of derivation by location, with this reformatory Tax Bill, states within the Nigeria federation will now be benefiting from the tax or royalties derived from the companies in each respective state where it is been accrued from accordingly, rather than principle of attribution.
Higher tax rate is detrimental to economic growth with the fact that the prices of goods and services produce within the country will skyrocket based on it higher percentage; these has been the assertion of minute uninformed individuals within Nigeria, the quality and level of information divulge by a country’s National will explicitly result to the rate of growth and transformation the country and her Nationals experience.
To succinctly project President Bola Tinubu Tax Reform Bills, it will be deduced that an average Nigeria earning minimum wage would have legal right not to pay any tax. The taxation formula induced by the current President of Nigeria has made it easier for the people not to experience any burden in taxation, any Nigerian earning below eight hundred thousand naira (N800,000) would not need to pay any tax if the bill is passed into law.
However to simply put, Average Nigerian salary earners are on the side of Tax relieve with the President Bola Tinubu proposed Tax Reform Bill.
In Nigeria of today we find ourselves incapacitated in the developmental projection strides, the new Tax Reform Bill is aimed at ensuring accountability and progression in the fiscal responsibility of business owners, business owners who are earning below 25 Million Naira (N25,000,000) would not need to pay any tax.
Nigeria Tax Bill is politely for business responsiveness as it negated all small business whose yearly income is below 25 Million Naira (N25,000,000) from paying profit tax and progressively abridged the top rate profit tax paid by larger companies from thirty percentage (30%) to twenty-five percentage (25%). In regards to section 56 of the Nigeria Tax Bill, a small company will be taxed zero percentage (0%) which is zero-rated while other companies (medium to large) will be charged twenty-seven point five percent (27.5%) in 2025 and twenty-five percentage (25%) from 2026. This negates the current thirty percent (30%) Company Income Tax (CIT) rate for large companies with over 100 Million Naira (N100,000,000) turnover and twenty percent (20%) for medium companies with over twenty-five million Naira (N25,000,000) to one hundred million Naira (N100,000,000) turnover.
The Nigeria Tax Bill initiated by president Bola Tinubu led administration is affable to small businesses, logically Ninety percentage (90%) of businesses in Nigeria are enshrined in the small business type. While denoting that around ninety percentage (90%) of businesses in Nigeria would be exempted from the payment of profit tax under the Nigeria Tax Bill (NTB). The bill evenly subsides the tax burden on large businesses and frees more resources for them to develop, leading to inward mobility of labor.
As stipulated in the Progressive Value Added Tax, vast majority of Nigerians, together with some governors and Sen. Ali Ndume, centered on Value Added Tax (VAT). Chapter Six of the Nigeria Tax Bill entails provisions on value-added tax. The bill, in section 146, indeed provides for a gradual increase in the VAT rate from the current 7.5% to 10% in 2025, 12.5% in 2026, 2027, 2028, and 2029, and hooked at 15% from 2030.
Majority of consumable goods and services utilized by the masses are negated from the payment of Tax or zero-rated. The provision of exemption from Value Added Tax (VAT) are contained in part IV of chapter 8 of the Nigeria Tax Bill, food items, medical items, baby products, transportation, electricity, LPG, CNG, petrol products, and so on are inclusively exempted from taxation. The vast educated population of a nation will result in the determination of her transformation.
Although broad consultation has been a bone of contention of the President Bola Tinubu led administration of the Nigeria Tax Bill. Proactively, we are expected to be informed in order for us not to be deformed in the fiscalization projection.
Oluwadara Akingbohungbe is President, Dara Info Worldwide, Author, Ghost Writer, Educator, Motivational Speaker, Leadership & Government Consultant. Writes from Ogun State, Nigeria and can be reach on email: oluwadaratemidayo@gmail.com, Facebook: DARA INFO, Instagram: Oluwadara Akingbohungbe
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