The Presidential Fiscal Policy and Tax Reforms Committee, has made bold proposals aimed at streamline the country’s tax system.
The Committee led by a tax expert, Taiwo Oyedele, aims to reduce the number of taxes and levies payable by businesses in the country by over 87%.
While they plan to make it easier for residents to pay taxes, the Committee said it is not unaware of the need to increase government’s revenue streams.
Oyedele said the Committee is proposing for an approval to retain eight key taxes: income tax, value-added tax, property tax, customs duties, excise tax, stamp duties, special levy, and harmonized levy.
Additionally, the social security contribution will be kept. The committee aims to complete the approval process by the end of the third quarter, with implementation expected to begin in January 2025.
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Currently, Nigeria has over 60 taxes and one of the lowest tax-to-GDP ratios in the world at 10%.
President Bola Tinubu’s government aims to increase this to 18% by 2027 to address rising fiscal deficits, which reached 5.6% of GDP in 2023.
To achieve this, the committee recommends increasing value-added tax on non-essential items like mobile phones while reducing tax on essential items like food, housing, transportation, education, and health to protect vulnerable Nigerians.
The standard VAT rate is currently 7.5%. Oyedele believes the proposed reforms will significantly benefit the country, and the committee expects the new tax regime to be in place by January.
“The implementation is expected to kick in by January next year, if everything goes according to our plan,” Oyedele said during a presentation in Lagos, recently.
