House of Representatives Passes Tax Reform Bills for Second Reading

• The House of Representatives passed President Tinubu’s four tax reform bills for a second reading, aiming to modernize Nigeria’s tax system
• The reforms seek to harmonize taxes, reduce PAYE rates, and eliminate VAT on essential goods, fostering inclusive growth

The House of Representatives, on Wednesday, passed the tax reform bills for a second reading after an extensive and robust debate on their general principles.

Earlier, the House had consolidated four tax reform bills submitted by President Bola Ahmed Tinubu into a single piece of legislation before commencing discussions on its provisions.

The consolidation followed a motion by the House Leader, Prof. Julius Ihonvbere, with the Speaker, Abbas Tajudeen, granting leave for the motion.

The consolidated bills include:

1. A Bill for an Act to Provide for the Assessment, Collection, and Accounting of Revenue Accruing to the Federation, Federal, States, and Local Governments; Prescribing the Powers and Functions of Tax Authorities, and for Related Matters (HB.1756).
2. A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No.13, 2007, and Enact the Nigeria Revenue Service (Establishment) Bill to Establish the Nigeria Revenue Service, Charged with Powers of Assessment, Collection, and Accounting for Revenue Accruable to the Government of the Federation, and for Related Matters (HB.1757).
3. A Bill for an Act to Establish the Joint Revenue Board, the Tax Appeal Tribunal, and the Office of the Tax Ombud for the Harmonisation, Coordination, and Settlement of Disputes Arising from Revenue Administration in Nigeria and for Related Matters (HB.1758).
4. A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and for Related Matters (HB.1759).

Leading the debate, House Leader Prof. Julius Ihonvbere emphasized the urgent need to modernize Nigeria’s tax system, which he described as outdated. He expressed gratitude to the Nigerian Governors’ Forum for their input, particularly in refining the VAT sharing formula, which had initially sparked concerns.

Ihonvbere highlighted the key benefits of the proposed tax reforms, including:

• Harmonization of multiple taxes
• Reduction in PAYE tax rates
• Zero VAT on essential goods and services such as food, healthcare, and education
• Incentives for low-income employees

According to him, the reforms will empower citizens, foster inclusive growth, and create a more efficient tax system.

A majority of lawmakers expressed strong support for the bills.

Rep. Bamidele Salam (PDP, Osun) argued that the reforms would generate more revenue for subnational governments, enabling them to undertake critical developmental projects. He also criticized the current tax administration system as outdated and overly complex, discouraging investment.

Rep. Sada Soli, while supporting the bills, cautioned that fairness and reasonability must be prioritized in their enactment. He raised concerns about inconsistencies and ambiguities in some clauses, warning that they could be misinterpreted or abused. He urged the committee working on the bills to address these issues.

Rep. Ademorin Kuye stressed the importance of revenue generation for addressing Nigeria’s infrastructure deficit, emphasizing the need to support the tax reforms.

Other lawmakers, including George Odinobi, Makki Yalleman, Cyril Hart, Igariwey Iduma, and Mariam Onuoha, also voiced their support for the bills.

Following extensive deliberations, the Speaker, Abbas Tajudeen, put the bills to a voice vote, and they were overwhelmingly passed for a second reading.

The tax reform bills will now proceed to the relevant House committees for further legislative scrutiny and possible amendments before moving to the next stage in the legislative process.