The National Assembly has been advised to exclude the Value Added Tax rate from the proposed tax legislation to ensure smoother amendments in the future.
The Nigerian tax bill, titled An Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions and Instruments, and for Related Matters, is among four bills President Bola Tinubu forwarded to lawmakers on October 3, 2024.
A key provision in the bill outlines a phased VAT increase—from the current 7.5% to 10% in 2025, rising to 12.5% between 2026 and 2029, and reaching 15% from 2030.
On Tuesday, the House of Representatives approved the four tax bills at the third reading stage, while the Senate continues to deliberate on the proposals.
Speaking with The PUNCH on Saturday Chairman of the Forum for State Commissioners of Finance, Akin Oyebode, emphasized that while tax law reforms were necessary, VAT should not be enshrined in the legislation.
“Nigeria’s tax laws have remained largely unchanged for over 50 years. Anyone who has the country’s best interest at heart would welcome these reforms. We cannot continue operating under century-old laws.
“But VAT rates and distribution formulas should not be fixed in the law. Including VAT in the law means that every amendment would require a legal review, which is not ideal. The law should set guiding principles, while details like VAT distribution should be handled through a finance act, reviewed periodically,” he stated.
Similarly, Paul Alaje, Chief Economist at SPM Professionals, voiced concerns about the proposed VAT increase.
“I understand their reasoning. They want to simplify the amendment process. While I support the tax bill, the VAT rate must remain unchanged. Any increase, even by 0.5%, will worsen inflation, and I can demonstrate this to anyone,” Alaje warned.
He also questioned the practicality of harmonizing tax rates, cautioning that such a move could introduce economic complications.
