Adedayo Akinwale in Abuja

The House of Representatives has approved the Tax Reform Bills submitted by President Bola Tinubu following the consideration and approval of the report of the House Committee on Finance. 

The Chairman of the Committee, Hon. James Faleke, submitted the report before the House at the plenary on Thursday and was subsequently approved.

The bills are: Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, and the Joint Revenue Board (Establishment) Bill. 

The four bills were read for the first time on October 8, 2024. However, the debate on the Bill had to be suspended following the controversy generated by the bills.

However, the debates on the bills were put on hold due to the controversy generated by the bills with some Northern lawmakers vehemently kicking against the bills.

The debates on the bills later degenerated  into a north/south issue, especially as it regards the sharing formula of Value Added Tax (VAT).

The National Economic Council (NEC), a body that comprises the governors and chaired by Vice-President Kashim Shettima, had urged the president to withdraw the bills for further consultations. 

Nevertheless, a defiant Tinubu refused, saying that all concerns should be addressed in the National Assembly.

Following the consideration of the bills by the House, the bills would now be ready for third reading before its eventual passage.

While presenting the report for consideration by members, Faleke revealed that all the contentious areas of the bills were considered by the committee during a six-day retreat and have been resolved.

According to the reports on the Nigeria Revenue Service Bill, it was suggested at the public hearing that  the representative of the Board would be picked  from the 36 states.

Also, the power to distrain conferred on the Service to be subject to a valid court order.

Concerns that the definition of ‘tax’ as contained in the Bill, may encroach on the revenue collection function of other agencies such as the Nigeria Customs Service were also resolved.

On the Nigeria Tax Administration Bill, the committee recommended that the Joint Revenue Board should  establish uniform guidelines regarding the accreditation of tax agents, and that this be subject to certification by the Chartered Institute of Taxation of Nigeria (CITN), being the professional tax body in Nigeria.

It was also recommended that regulations relating to the states’ Revenue Service and Local Government Tax Boards be removed, as the inclusion is ultra vires of the powers of the National Assembly.

It recommended proposed restriction of the president’s powers to exempt/waive tax payments by introducing an annual limit for such exemptions and waivers.

It was suggested that there was a need to clearly describe and define what constitutes attribution and derivation for the purpose of distribution of Value Added Tax (VAT) revenue. 

It was recommended that the tenure and retirement age of the Secretary to the Tax Appeal Tribunal be deleted and include new qualifying conditions for the Coordinating and Zonal Secretaries of the Tribunal.

It was suggested that the newly created Office of the Ombudsman to the Tribunal be scrapped as the former creates an additional layer of costs without proportional benefits, in addition to leading to overlapping jurisdictions between the two bodies.

It was further suggested that the Joint Revenue Board should establish uniform guidelines regarding the accreditation of tax agents, and that this be subject to certification by the CITN, being the professional tax body in Nigeria.

Recommendations were also given regulations for the State Revenue Service and Local Government Tax Boards be removed, as the inclusion is ultra vires of the powers of the National Assembly.

It was recommended that the the president’s powers to exempt/waive tax payments be restricted by introducing an annual limit for such exemptions and waivers.

Suggestions to clearly describe and define what constitutes attribution and derivation for the purpose of distribution of Value Added Tax (VAT) revenue were made. 

The committee called for further consultations with relevant agencies and institutions to arrive at an equitable VAT sharing formula.

The committee proposed that a flexible implementation of the requirement to possess a Tax ID be considered in order to operate a bank account, so as not to discourage the informal sector from utilizing banking services.

It also recommended the deletion of the provision which allows the tax authorities to sell taxpayers’ movable assets without a court order. 

It recommended proposal to reinstate the deleted provision on the use of Tax Clearance Certificates (TCCs), on the basis that TCCs are the best tool to ensure taxpayers’ compliance. 

Recommendation to remove seemingly mundane matters – offences, penalties, & other administrative areas – from the Bill, as these can be addressed via subsidiary legislations, in order to allow for future alignment with realities without legislative changes.

Faleke said the committee proposed the replacement of the word ecclesiastical’ with ‘religious’ in the Nigeria Tax Bill as the former is associated only with the Christianity and the latter is religion-neutral.

He added that the committee agreed to the deletion of the proposed re-introduction of inheritance tax under the guise of taxation of family income, as this oversteps divine jurisdiction which places inheritance matters within the scope of the Sharia and Customary Laws of the North and South respectively.

The committee also proposed a reduction of VAT rate to 5 per cent or alternatively, maintain the current rate of 7.5 per cent, while also recommending for the re-instatement of contributions towards NASENI and NITDA, and a call to ensure continuous funding from the development levy.