Nigeria’s tax regime and the imminent changes
In our previous pointers to 2024 and beyond possible tax changes we commented on the Presidential Fiscal Policy and Tax Reforms Committee (the “Committee”) established on 8 August 2023 by President Bola Ahmed Tinubu’s government. The Committee, headed by Mr Taiwo Oyedele, and comprised of experts and stakeholders from the private and public sectors, has the mandate to make recommendations geared towards fiscal governance; revenue transformation; and economic growth facilitation.
The Committee’s work is structured into three phases: to propose “quick wins” to address critical economic issues; to propose critical reforms that will eliminate the multiplicity of taxes, simplify tax legislation, ensure fiscal policy coordination, drive accountability and transparent reporting, and increase the tax-to-GDP ratio from the current 10.86% to at least 18%; and advise the federal government on the effective implementation of proposed reforms.
The Committee presented a Quick Wins Report to the President on 24 October 2023, and some key recommendations of the Report include:
● increase in the personal income tax exempt thresholds and personal relief allowance
● tax breaks for the private sector in respect of wage increases to low-income earners
● subsidising transportation
● payment of taxes on foreign currency-denominated transactions in Naira for Nigerian businesses
● suspension of VAT on diesel and tax waivers on CNG, CNG conversion, and renewable energy items
● ease the pressure on the working capital of businesses
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● suspension of multiple taxes on the poor and small businesses
● expansion of the official forex market to incorporate BDCs, forex apps and retail forex dealers, and outlaw transactions in the black market
● imposition of excise tax on forex transactions outside the official market
● allowing taxpayers to make part payments of outstanding tax liabilities
● waiver of penalty and interests for full payment of outstanding tax liabilities by 31 December 2023
The Committee is expected to deliver its next report in February 2024
