The federal government is expected to kick off its tax reforms aimed at simplifying Nigeria’s tax system in July, according to Taiwo Oyedele, head of the Presidential Fiscal Policy and Tax Reforms Committee.
The tax chief stated that legislation is to be passed this quarter, with further preparations for implementation to follow in the coming months.
“I need to talk about the tax reforms. Part of the expectation is we expect the tax reforms to be approved, particularly the tax reform bills in 2025.
“Our expectation is before the end of Q1 and therefore we can give notice to taxpayers to prepare themselves with capacity and begin to implement around 1st of July,” Oyedele said on Saturday at an event, The Platform, in Lagos.
The reforms are intended to centralize and simplify tax collection, including a reduction of more than 60 separate taxes and levies to six.
Nigeria is aiming to harmonize its complex tax system with a new bill that’s aimed at unburdening multiple taxation and ensuring exemptions for low-income earners.
But the reforms have been greeted with disparaging debates with many Northern leaders calling for its withdrawal while other stakeholders are urging the federal government to engage in wider consultations.
“Those reforms are transformational. They keep me excited,” Oyedele said.
“The reason why I have the energy to keep going is because of the possibilities I see in those reforms, which haven’t been done since independence.
“Structurally, those reforms will help Nigeria. They will reduce the pressure even on the policy authorities,” the renowned tax expert added.
As Africa’s largest economy, Nigeria’s tax to GDP ratio comes as one of the lowest in the world at a staggering 10.8 percent with a country of more than 200 million people.
Hence, the Presidential Fiscal Policy and Tax Reforms Committee was inaugurated by President Bola Tinubu with the mandate of simplifying Nigeria’s tax system and stimulating growth and development.
The Committee has a core responsibility of transforming Nigeria’s revenue generation for sustainable development to achieve at least 18 percent tax to GDP ratio by 2026.
Oyedele said the current tax rules push Nigerian businesses to the FX market as they are demanded to pay taxes worth over $3.5 billion per annum, stating that these levies are to be paid in U.S dollars distorting the market and piling pressure on the naira.
He argued that part of what the new tax reforms would do is to wipe such practices out, allowing the naira to be stable and incentivizing business operations.
“There are provisions in those bills to help with stability, to help with ensuring that we do not have that premium between the market and the official market.
“If I say to you that in Nigeria today, Nigerian businesses are being asked to pay levies and fees and taxes in dollars worth over $3.5 billion a year.
“You send your people to the forex market to look for dollars to pay the government. It does not add $1 to your supply, but it adds $3.5 billion to your demand. We are fixing that,” Oyedele said.
