By Kede Aihie
Nigeria’s tax system is on the cusp of a significant overhaul, courtesy of the Proposed Nigeria Tax Administration Bill, 2024. This bill is part of a broader effort to reform the country’s tax system, aiming to streamline tax processes, reduce administrative burdens, and promote transparency and fairness in tax administration.
A cursory look at the bill reveals a much-needed reform of a tax regime that has been deemed unfit for purpose, allowing for opaque taxation practices in Nigeria. If passed into law, it will undoubtedly be one of the most significant sectoral reforms in Nigeria’s 64 years of independence.
The bill proposes merging all tax laws into a single, comprehensive framework to reduce complexity and make compliance easier for businesses and individuals. It also introduces a more progressive Personal Income Tax (PIT) system, with reduced rates for low-income earners and exemptions for those earning below ₦800,000 annually. Additionally, the bill raises the threshold for Companies Income Tax (CIT) exemption from ₦25 million to ₦50 million in turnover, benefiting small businesses.
The proposed bill has sparked mixed reactions, with some welcoming the changes and others expressing concerns about the timing and potential impact on citizens. Proponents argue that the reforms will simplify the tax system, reduce burdens on small businesses, and increase revenue generation. Critics, however, worry that the changes may add to the already high cost of living in Nigeria.
The bill has also faced opposition from some Northern politicians, who claim that it will exacerbate poverty in the North. However, this stance appears disingenuous, as these same politicians have been in power for decades and have done little to alleviate poverty in the region. Senator Ali Ndume argued that the bill should be withdrawn for further consultation, citing concerns about the revenue sharing formula and the potential for the bill to exacerbate poverty in the North. However, other senators, such as Senator Tahir Mongunu, countered that the bill’s provisions would actually benefit the North and other regions.
Ultimately, the passage of the Proposed Nigeria Tax Administration Bill, 2024, would mark a significant milestone in Nigeria’s quest for a more efficient, transparent, and equitable tax system.
