Nigeria’s tax policies are undergoing significant changes, but some of the most controversial proposals have been scrapped. The House of Representatives Committee on Finance has amended key aspects of President Bola Tinubu’s tax bill following concerns raised by stakeholders during a public hearing in February. These revisions aim to balance government revenue generation with economic growth while ensuring businesses and individuals are not overburdened.
VAT Increase Scrapped (7.5% Stays)
One of the most debated proposals was the increase in Value Added Tax (VAT). While some stakeholders pushed for a reduction to 5%, lawmakers decided to maintain the current 7.5% rate. This decision means consumers and businesses will not face immediate price hikes due to increased VAT, providing much-needed stability in the economy.
No More Inheritance Tax
The proposed inheritance tax, aimed at generating revenue from inherited wealth, has been completely removed from the bill. Public concerns about the financial burden such a tax could place on families influenced this decision. This is a relief for many Nigerians who feared an additional layer of taxation on inherited assets.
Key Government Agencies Keep Their Funding
Initially, the bill proposed defunding critical government agencies, including:
National Agency for Science and Engineering Infrastructure (NASENI)
Tertiary Education Trust Fund (TETFUND)
National Information Technology Development Agency (NITDA)
However, lawmakers have reversed this decision, ensuring these institutions continue to receive the necessary funding to drive innovation, education, and technological development.
New Rules for Free Trade Zones
Businesses operating in Nigeria’s Free Trade Zones will now have to meet stricter requirements to enjoy tax benefits. The new conditions include:
75% of goods and services must be for export
Only 25% can be sold within Nigeria
This policy aims to promote export-driven businesses while limiting tax-free sales in the local market. It aligns with Nigeria’s broader economic strategy of boosting exports and foreign exchange earnings.
Balancing Revenue and Investment
With these amendments, the House aims to strike a balance between increasing government revenue and ensuring businesses and individuals are not excessively taxed. The big question remains: Will these adjustments drive economic growth, or are further changes needed?
As Nigeria continues refining its tax policies, stakeholders should stay informed and engage in discussions that shape the nation’s economic future.