The House of Representatives passed all four tax bills in one fell swoop. The senate now needs to concur with the green chamber
The House of Representatives passed al four tax reform bills after taking the third reading of the bills on Tuesday.
Parliament Reports recalls that the House had on Thursday last week, considered and approved the recommendations in the report of the House special committee on tax reform bills.
While awaiting the senate to similarly pass the bills, the proposed reforms are expected to be transmitted to the President for his assent in the days ahead.
Timeline of the Tax Bills
The four tax bills were originally transmitted to the National Assembly in October 2024 by President Tinubu. They include:
1. Nigeria Tax Administration Bill (HB.1756) – “A Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States, and Local Governments; Prescribe the Powers and Functions of Tax Authorities; and for Related Matters.”
2. Nigeria Revenue Service (Establishment) Bill (HB.1757) – “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 Nigeria Revenue Service, charged with Powers of Assessment, Collection of, and Accounting for Revenue Accruable to the Government of the Federation and for Related Matters.”
3. Joint Revenue Board Bill (HB.1758) – “A Bill for an Act to Establish Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombudsman, for the Harmonization, Coordination and Settlement of Disputes arising from Revenue Administration in Nigeria and for Related Matters.”
4. Nigeria Tax Bill (HB.1759) – “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.”
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Controversy and Resolution
The bills initially faced resistance from northern governors, who argued they could negatively impact the region. However, after negotiations, the Nigeria Governors’ Forum (NGF) endorsed the bills in January 2025, following an agreement on an equitable VAT-sharing formula.
In November 2024, the senate passed the bills for a second reading, followed by the House of Representatives in February 2025. Both chambers then held a three-day public hearing where over 80 stakeholders debated key issues such as VAT rates and inheritance tax.
Key Amendments and Recommendations
Section 146 of the Nigeria Tax Bill proposed a gradual increase to the value-added tax (VAT) from the current 7.5 percent to 12.5 percent through 2026, 2027, 2028, and 2029, while by 2030, the VAT will be raised to 15 percent.
The proposal was criticised and rejected by stakeholders, including the Trade Union Congress (TUC), during the public hearing.
However, the committee reviewed the section and recommended that VAT should be charged at a rate of 7.5% — the decision was approved by the House.
On the distribution of VAT revenue, the Nigeria Tax Bill proposed 10 percent for the federal government, 50 percent to the states and the Federal Capital Territory (FCT), and 35 percent to the local governments.
However, the committee recommended a new distribution of 10 percent to the federal government, 55 percent to the states and the federal capital territory (FCT), and 35 percent to the local governments.
The Committee also recommended the inclusion of the need to obtain the approval of the National Assembly where the President intends to exempt any person or class of income/profits from tax.
Likewise it was recommended by the committee that the Accountant-General is required to receive a resolution from the National Assembly in order to deduct any unremitted revenue due from Ministries, Departments, and Agencies (MDAs).
