Lawmakers Approve Tax Reform Bill, modify VAT charge, sharing formula
- After months of deliberations, the Tax Reform Bill has finally gotten a nod of approval from the House of Representatives
- The House Committee presented its recommendations in a report that the house adopted
- However, key changes have been made to the VAT-sharing has formula and VAT charges
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
The Federal House of Representatives has finally adopted the Committee on Finance report on the Tax Reform Bills.
The lawmakers considered the recommendations clause-by-clause after the committee chairman, James Falake, moved the motion.
Section 146 of the Nigeria Tax Bill had proposed a phased increment of the Value-Added Tax (VAT) from the current 7.5 percent, first to 12.5% in 2026, and finally to 15% by 2030.
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This provision received heavy criticism from several stakeholders, particularly the Trade Union Congress (TUC).
The House Committee on Finance reviewed this section and recommended that VAT remain at 7.5%.
The income tax provision already provides for lower taxes for low-income earners, bringing much-needed relief to the vulnerable Nigerians.
President presents Tax Reform Bills
President Bola Tinubu presented the four Tax Reform Bills — the Nigeria tax bill, the Tax Administration bill, the Joint Revenue Board Establishment Bill, and the Nigeria Revenue Service Bill – before the lawmakers on October 3, 2024.
The bill contained several key reforms to Nigeria’s tax administration system, including changing the name of the Tax revenue administrator, among others.
The bill faced much criticism and generated a lot of reactions, up till the public hearing held recently to take public opinions from stakeholders.
Recall that the public hearing received input from over 100 civil society groups and stakeholders.
The Nigeria Customs Service (NCS) was present at the public hearing and pointed out a section of the bill that runs contrary to the existing Customs Act.
VAT sharing formula altered
The lawmakers also altered the VAT distribution formula for sharing among the local, state and federal governments.
The section initially proposed a sharing formula that gives the federal government 15%, state government and FCT 50%, and local governments 10%.
This provision also generated heated reactions from the Nigerian Governors Forum (NGF), but they finally gave the nod after recommending what they considered an equitable sharing formula.
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According to the CABLE reports, the finance committee modified this section so that the federal government gets 10%, the state governments get 55%, but retained the local government share at 35%.
Faleke stated;
“These bills underwent three full days of public hearings, with input from over 80 key stakeholders. Afterwards, we held an eight-day retreat to debate each clause."
What remains is the final approval from the Senate, and Presidential assent.
Housing Developers call for Tax Reliefs
In related news, a group of housing developers under the umbrella of the Housing Development Advocacy Network (HDAN) have asked the FG to include tax reliefs for them in the Tax Bill.
According to them, the demand for affordable housing is high in Nigeria due to the growing population and loss of purchasing power in the country.
The group argued that tax reliefs would provide incentive enough to attract more investors into social housing and result in lower rents.
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Source: Legit.ng
