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Nigerian Government explains tax reforms not against North but for benefit of all states

*The Federal Government explains the proposed tax reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure towards making the Nigerian economy more competitive by simplifying tax obligations for businesses and individuals nationwide

Isola Moses | ConsumerConnect

The Federal Government has said the tax reform bills currently in the National Assembly (NASS), Abuja, FCT, are designed to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure.

The government noted the aim is to make the Nigerian economy more competitive by simplifying tax obligations for businesses and individuals nationwide.

Mr. Bayo Onanuga, Special Adviser to the President on Information and Strategy, who stated this Thursday, October 31, 2024, recalled that Governors of 19 Northern States of Nigeria, on the platform of the Northern Governors’ Forum, at their meeting Monday, October 28, 2024, expressed their opposition to the new derivation-based model for Value-Added Tax (VAT) distribution in the new tax reform bills before the National Assembly.

The statement noted Governor Muhammed Inuwa Yahaya of Gombe State, Chairman of the Forum, read the communiqué.

It also stated the Northern Governors’ Forum meeting had traditional rulers from the region, led by the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III, in attendance.

The government said while it commend the Governors and traditional rulers for supporting President Bola Tinubu over the success recorded in addressing the country’s security challenges, the administration considered it necessary to address the misunderstandings and misgivings around the tax reform already embarked upon by the administration.

Onanuga explained that President Tinubu and the Federal Executive Council (FEC) recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes, enhancing efficiency and eliminating redundancies across the nation’s tax operations.

He further said: “These reforms emerged after an extensive review of existing tax laws.

“The National Assembly (NASS) is considering four Executive Bills, designed to transform and modernise Nigeria’s tax landscape.”

According to him, first is the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.

Second, the Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country.

Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country.

Third, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.

Fourth, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities.

The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, which would serve as a complaint resolution body for taxpayers.

The Government stated it is instructive to note that these proposed laws would not increase the number of taxes currently in operation.

It stressed instead, they are designed to optimise and simplify existing tax frameworks.

The statement noted: “The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.

“The reforms will not lead to job losses.

“On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.

Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry.”

The Presidential aide as well stated that the laws aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.

At the moment, tax administration lacks coordination among Federal, state, and local tax authorities, often resulting in overlapping responsibilities, confusion, and inefficiency.

Without reform, this inefficiency will persist, said the Federal Government.

It said: “The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.

“Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.”

The proposed reforms, Onanuga noted, seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.

The government also emphasised that on the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.

The statement stressed “the current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed.

“The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.”

It explained: “The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services.

“This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states.

“These reforms are critical to improving the lives of Nigerians and were not put forward by President Tinubu to undermine any part of the country.”

The Nigerian Government said: “There is no better time than now for the National Assembly to give due consideration to these bills that will overhaul our tax systems and create the revenue all the tiers of government require to fund the development our country and people urgently need.”

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