Nigeria is undergoing significant tax reforms aimed at boosting government revenue and fostering economic growth. The Senate recently passed four key tax reform bills, including the Nigeria Tax Administration Bill, the Nigeria Revenue Service Bill, the Joint Revenue Board Bill, and the Nigeria Tax Bill. These bills propose measures such as increasing the Value Added Tax (VAT) from 7.5% to 12.5% and transferring fiscal duties like royalty and petroleum profit tax collection to the new Nigeria Revenue Service .
However, the proposed VAT increase has faced criticism. The Nigeria Governors’ Forum has expressed support for the reform bills but has rejected the VAT increase, proposing an equitable sharing formula for VAT distribution: 50% based on equality, 30% based on derivation, and 20% based on population .
Additionally, the Nigeria Labour Congress has rejected the tax reform bills, advocating for the creation of a new national tax framework that addresses the welfare of citizens and ensures inclusivity in policymaking.
Despite these challenges, the reforms are seen as crucial for enhancing fiscal stability and aligning Nigeria’s tax system with global best practices. The National Assembly is expected to reconcile the versions of the bills before forwarding them to President Bola Tinubu for final approval .
These developments indicate a significant shift towards modernizing Nigeria’s tax system, with the potential to strengthen the economy and improve public service delivery.
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