Upon resumption, the tax reform bills, long pending before the legislature, appeared as one of the first items addressed, signalling the urgency attached to their consideration.
The senate has passed a set of long-awaited tax reform bills aimed at overhauling Nigeria’s outdated tax framework.
This followed the presentation of a report by the Committee on Finance chaired by Sen. Sani Musa (APC, Niger East) during Wednesday’s plenary.
The four (4) bills include the Nigeria Tax Bill (NTB) 2024, Nigeria Tax Administration Bill (NTAB), Nigeria Revenue Service (Establishment) Bill (NRSEB) and Joint Revenue Board (Establishment) Bill (IRBEB).
However only two of the four bills were passed at the day’s plenary. The bills are the Nigeria Revenue Service (Establishment) Bill (NRSEB) and the 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 which represents the Nigeria Tax Administration Bill (NTAB).
The President of the Senate, Godswill Akpabio noted that the other two bills; (Nigeria Tax Bill 2024 and the Joint Revenue Board (Establishment) Bill (IRBEB) will be considered and passed in the next legislative day.
Parliament Reports recalls that at the senate plenary session held on 3 December, 2024, the senate constituted an ad-hoc committee to engage with the executive arm of government and the attorney-general of the federation and minister of justice, with the aim of resolving the issues that emerged during the legislative processing of the 2024 tax reform bills. Following the submission of the bills by the president to the legislature on 3 October 2024, several controversies surfaced.
Meanwhile, the committee report was only formally laid before the senate the previous day (Tuesday). Following this, the President of the Senate, Sen. Godswill Akpabio, directed the chairman of the finance committee, Sen. Sani Musa, to ensure that copies of the report were distributed to all senators. Akpabio explained that this was to allow lawmakers ample time to study the provisions of the bills before reconvening the next day for a thorough clause-by-clause consideration during plenary.
During Wednesday’s plenary, the senate went into a closed door session which lasted for over an hour. Reconvening after the closed door, Sen Musa presented the committee’s findings and recommendations that could reshape the country’s fiscal structure.
He explained that the committee convened multiple times, invited and held consultations with almost 64 organisations including Civil Society Organisations (CSOS), the attorney-general of the federation and minister of justice, the solicitor-general and permanent secretary of the ministry of justice, the executive chairman of the Federal Inland Revenue Service (FIRS), the executive chairman of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), and the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms (PCFPTR). These engagements enabled direct discussions on the contentious and controversial provisions of the bills.
The findings and recommendations
Sen. Musa raised concerns over the proposed 4% development levy meant to replace earmarked taxes that currently fund key agencies such as the Tertiary Education Trust Fund (TETFUND), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI). “These agencies of government are essential for human capital and overall economic development of the country. Phasing out their funding can lead to stagnation in education and the country losing out in technological evolutions and advancement,” he cautioned.
The committee proposed the following VAT revenue sharing formula: 10% to the federal government; 55% to state governments and the Federal Capital Territory; and 35% to local governments.
Updated penalties were also outlined. Failure to register now attracts a fine of N100,000 in the first month and N50,000 for each subsequent month. Failure to file returns incurs N200,000 initially and N50,000 thereafter, while failure to keep proper records attracts administrative penalties of N10,000 for individuals and N100,000 for companies. Those who fail to remit taxes deducted at source could face imprisonment of up to three years.
Consideration
Some clauses in the bill quickly stirred discontent when the senate dissolved into the committee of the whole to consider the provisions one after the other.
Clause 22 immediately came under scrutiny. It proposed that “three percent of the total revenue collected by the service, which shall be appropriated by the national assembly, subject to the review of the percentage from time to time, depending on the economic situation or as the economic situation requires.”
Sen. Aliyu Wadada raised a concern, suggesting that the figure be reduced to two percent. He argued that the total revenue involved was so substantial it exceeded the combined budgets of 16 states, and therefore required careful management, especially since it includes both oil and non-oil revenue. His amendment was eventually adopted.
Clause 39 also triggered debate when Sen. Adams Oshiomhole, backed by Sen. Ibrahim Dankwambo, cautioned against excessive legislative control over the service’s financial operations. “Anything done should be overseen by the senate, but this should not mean day-to-day interference. That would create bottlenecks and delay urgent financial decisions,” Oshiomhole warned.
But defending the clause, Sen. Sani Musa explained that its purpose was to strengthen the national assembly’s oversight and promote accountability in public finance. He stressed that the intent was not to obstruct timely financial action, but to curb unauthorised expenditures. In the end, the clause was retained.
Resolution
The senate thereafter resolved into the committee of the whole to scrutinise the bills clause by clause, a process that ultimately culminated in their passage.
The passage of the tax bills marked the first bill passed by the senate just as it resumed plenary on 6 May, 2025 after a nearly six-week recess. The recess was to observe the Eid el-Fitr and Easter celebrations, as well as the Workers’ Day holiday.
The bills are part of the broader fiscal reform agenda of the federal government and were designed to address inefficiencies in tax administration, widen the tax base, and boost non-oil revenue. The reforms also aim to harmonise various tax laws to reduce ambiguity and improve compliance among individuals and corporate entities.
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Parliament Reports recalls that the house of representatives had earlier passed the tax reform bills just before the recess, paving the way for final legislative harmonisation. The senate’s passage now brings the legislation closer to becoming law, pending concurrence and presidential assent.
Breakdown of the bill
The bills draw from the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee led by Taiwo Oyedele, which was set up in 2023 to restructure Nigeria’s complex and burdensome tax system. The committee identified multiple taxation, inefficiencies in collection, poor coordination between federal and subnational tax authorities, and a narrow taxpayer base as some of the major challenges impeding revenue generation.
Among the key highlights of the bills are the streamlining of taxes across different tiers of government, the establishment of a single digital tax filing platform, and the reduction of compliance costs for small businesses. The reforms are also expected to enhance transparency, discourage arbitrary levies, and provide legal backing for the collection of certain digital and cross-border taxes.
– The Nigerian Tax Administration Bill (NTAB)
This bill seeks to harmonise administration of taxes in a very challenged federation with separation of powers among three tiers of governance.
– The Nigerian Revenue Service (Establishment) Bill (NRSB)
The bill seeks to repeal the Federal Inland Revenue Service (FIRS) Act with the Nigerian Revenue Service (NRS) bill. Under the ill, the NRS can assist state and Local Government with their tax collection, if they so wish.
