The Presidential Committee on Fiscal Policy and Tax Reforms says the Nigeria tax system currently in use is outdated as such inhibits growth.
Chairman of the tax reforms committee, Taiwo Oyedele who disclosed this at the Annual General Meeting of the Finance Correspondents Association of Nigeria in Abuja while presenting his paper titled, “Tax Reform as a Pillar for Nigeria’s Economic Prosperity,” said the current outed tax system is inimical to economic growth and development.
“Nigeria’s tax system is unconducive for growth, with multiplicity of taxes and taxing agencies, and high corporate tax burden on businesses, taxing poverty, capital and investments, and using archaic laws and ambiguous provisions,” he said.
Mr. Oyedele noted that the tax systems in Nigeria is not in tune with international best practices as such the ongoing reforms is apt in order for the country to be in tandem with other developed nations of the world.
He said the proposed reforms was aimed at reducing business risks, lower tax burden, usher in a competitive tax regime, provide economic reliefs, and create opportunities for businesses and households, adding that the reform will also ensure macroeconomic stability, catalase economic growth, improve revenue mobilisation, improved tax to GDP ratio, healthy fiscal balance, enhanced credit rating, lower cost of debt, equity and fairness between government and taxpayers.
Oh his part, a well renowned Economist, Dr. Paul Alaje, said tax reforms is a catalyst that enhance economic and social benefits that the tax system may provide as well as increase the effectiveness of the collection.
He noted that tax reforms have been discovered to be of great importance as it helps to finance infrastructure, reduce debt burden and facilitate development in a nation.
Dr. Alaje said the new tax reform bill seeks to address issues around multiple layered taxation, broaden the tax base and streamline and integrate different tax laws.
“The new Nigeria tax bill consolidates multiple tax laws and introduce a progressive personal income tax where earnings up to N800,000 are exempt; the next is 2.2million is taxed at 15%, the following, N9 million at 18%, the subsequent N13 million at 21%, the next is N25 million at 235, and incomes above 50 million at 25%-ensuring higher earners pay more. Zero tax for companies with a turnover of less than 50 million.
“For corporate entities, tax rates are reduced from 30% TO 27.5% in 2025 and further to 25% in 2026 for larger companies, while small businesses with turnover below 50 Million remain exempt,” he said.
Dr. Alaje, however, expressed concerns that the Valued Added Tax (VAT) rates, rising from 10% in 2025 to 12.5% in 2026 in the proposed tax reforms has raised fears of exacerbating inflation.
He listed other concerns to include, regional economic disparities, implementation challenges, and economic burden on small businesses.
Dr. Alaje submitted that addressing these concerns through comprehensive stakeholder consultations and phased implementation strategies was crucial to ensure the reforms achieve their intended economic benefits without unintended adverse effects.