IT firms demand major tax reforms

 IT firms in Nigeria have been vocal about the need for significant tax reforms to address longstanding challenges in the country’s fiscal landscape. Here’s an overview of the current developments and the industry’s stance:

Key Tax Reforms Affecting IT Firms

1. Consolidation of Levies: The Nigerian Tax Bill 2024 proposes merging several industry-specific levies such as the Tertiary Education Tax, NASENI Levy, and Information Technology Tax into a single development levy. This levy is set to decrease gradually from 4% in 2025 to 2% by 2030, aiming to simplify compliance for businesses, including IT firms . 
2. Corporate Income Tax Reduction: The federal government plans to reduce corporate income tax rates over the next one to two years. This move is intended to alleviate the tax burden on businesses and attract more investments into the country . 
3. Withholding Tax Reforms: The implementation of the 2024 Withholding Tax Regulations, effective from January 1, 2025, introduces exemptions for Small and Medium Enterprises (SMEs) and key sectors like manufacturing and agriculture. These reforms aim to streamline tax compliance and reduce financial strain on businesses
4. Industry Concerns and Advocacy

IT firms have expressed concerns over the multiplicity of taxes and levies, which they argue complicate the business environment and hinder growth. The proposed reforms are seen as a step toward creating a more conducive environment for the technology sector. However, the industry remains vigilant, advocating for the elimination of over 50 nuisance taxes that disproportionately affect local businesses .

Ongoing Legislative Developments

The Nigerian government has introduced several tax reform bills aimed at overhauling the nation’s tax system. These include the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. While these bills have garnered support from various stakeholders, including the Chartered Institute of Taxation of Nigeria (CITN), they are currently under review by the National Assembly.

In summary, while the Nigerian government is taking steps to reform the tax system, IT firms continue to advocate for changes that will simplify compliance, reduce the tax burden, and foster a more supportive environment for technological innovation and growth.