Many stakeholders present at the public hearing on the Tax Reform Bills currently before the National Assembly on Wednesday expressed support for the passage of the bills but raised concerns about certain aspects of the proposed legislation.
The public hearing on the bills was organized by the House Special Committee on Tax Reform Bills, headed by James Faleke (APC-Lagos).
The bills under consideration are the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill.
Stakeholders at the public hearing included the Chartered Institute of Taxation of Nigeria, the Chartered Institute of Bankers of Nigeria (CIBN), the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), the Association of Capital Market Academics of Nigeria (ACMAN), the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC), and the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
Others were the Nigeria National Petroleum Company Limited (NNPCL), the Institute of Chartered Accountants of Nigeria (ICAN), the Supreme Council for Sharia in Nigeria, the Association of National Accountants of Nigeria (ANAN), and the Arewa Consultative Forum (ACF), among others.
During the hearing, the Supreme Council for Sharia in Nigeria called for the postponement of technology-driven tax collection measures as contained in the bill, arguing that Nigeria is not yet ready for such an overhaul.
The council, represented by a lecturer at Ahmadu Bello University, Zaria, Ahmed Dogarawa, contended that the proposed fiscalization provisions could impose undue burdens on the average Nigerian taxpayer.
Dogarawa maintained that the proposed reforms should be fair, practical, and aligned with Nigeria’s economic realities.
He said the Nigeria Tax Administration Bill mandates the adoption of advanced technology for tax assessment and collection.
Referring to Sections 23, 69, and 98 of the proposed Tax Administration Bill, he warned that rushing into this system would burden the average Nigerian, many of whom lack the necessary skills and technological know-how to comply with digital VAT returns.
He noted that similar experiments in Lagos State, involving a system dubbed “Alpha-Beta,” have already raised concerns about data credibility and administrative complications.
The council recommended either the deletion of the sections related to fiscalization entirely or the introduction of a moratorium of five to ten years, during which time the Federal Inland Revenue Service (FIRS) and other relevant agencies can build the requisite capacity.
He stressed that such a delay would allow the necessary technological infrastructure and human resource training to mature, thereby ensuring a smoother transition when digital tax systems are eventually implemented.
He also raised concerns over the use of third-party data in the new system.
The council cautioned that relying on external data sources could undermine the integrity of tax collection, opening the door for consultants to manipulate figures and erode public trust in the system.
This, he said, would ultimately compromise the credibility of Nigeria’s tax data and impede effective revenue collection.
The council further suggested reducing VAT back to five percent or, at worst, maintaining the current 7.5 percent instead of increasing it, given the economic challenges Nigerians are facing.
Meanwhile, a brief drama ensued during the hearing when James Faleke, the committee chairman, invited the Group Chief Executive Officer of the Nigeria National Petroleum Company (NNPC) Limited, Mele Kyari, to deliver his presentation.
Kyari stepped forward, ascended the podium, and began addressing the gathering.
However, his address was cut short when Faleke interrupted, asking if he had submitted his proposal to the committee.
Kyari responded, clarifying that amendments had been made to his memorandum and assuring the committee that the updated document would be submitted later.
He attempted to continue his presentation, but his explanation was rejected by Faleke, who said the NNPC boss could make his presentation on Thursday or Friday when his proposal was ready—leaving no room for negotiation.
With his presentation abruptly halted, Kyari stepped down from the podium and exited the venue.
Before the commencement of the public hearing, Faleke had stated that proposals should be submitted to the committee before representatives of any organization proceed to address the audience.
The Nigeria Liquefied Natural Gas (LNG), while expressing support for the Nigeria Tax Bill, stressed the need to consider exports from Nigeria as zero-rated so that they can be competitive globally.
LNG’s Manager on Tax and Financial Systems, Mr. Clement Okoro, remarked that since contract agreements have already been subjected to Value Added Tax (VAT), the same should apply to stamp duty to avoid double taxation.
Okoro also called on lawmakers to ensure that executive orders are reflected in the tax bills to avoid ambiguity regarding claims for capital allowances.
Among other recommendations, he also called for the inclusion of Section 231 of the Company Income Tax Act, which grants tax waivers, into the tax bill, as there is a need to attract foreign exchange.
Earlier, Speaker of the House of Representatives, Abbas Tajudeen, decried Nigeria’s six percent tax-to-GDP ratio despite its status as Africa’s largest economy.
Abbas noted that the ratio is far below the global average and the World Bank’s minimum benchmark of 15 percent for sustainable development.
Represented by the House Leader, Prof. Julius Ihonvbere, he stressed the need to address the challenge as part of ongoing efforts to reduce reliance on debt financing, ensure fiscal stability, and secure Nigeria’s future.
Stating that taxes are the bedrock of public revenue, providing the resources required to deliver education, healthcare, infrastructure, and security, the Speaker reiterated that the proposed tax reform bills aim to diversify Nigeria’s revenue base, promote equity, and foster an enabling environment for investment and innovation.
Noting that taxes should be fair, transparent, and justifiable, balancing the need for public revenue with the burdens they impose on individuals and businesses, he assured that the House would scrutinize the bills thoroughly to ensure they align with the best interests of Nigerians.
Chairman of the committee, James Faleke (APC-Lagos), on his part, stressed the need for urgent tax reforms in the country.
Faleke stated that the reform bills, when enacted, will repeal 11 laws, including the Companies Income Tax Act (CITA) (1979), Value Added Tax Act (VAT) (1993), Personal Income Tax Act (PITA) (1993), Income Tax (Authorized Communications) Act (1966), Capital Gains Tax Act (1967), Stamp Duties Act (1979), Casino Act (1965), Deep Offshore and Inland Basin Act (1999), Industrial Development (Income Tax Relief) Act, Petroleum Profit Tax Act (1959), and Venture Capital (Incentives) Act (1993).
Faleke recalled that in 2023, data from the International Monetary Fund (IMF) showed that Nigeria’s tax-to-GDP ratio was approximately 9.4 percent compared to South Africa’s 21.6 percent, Kenya’s 14.1 percent, and Senegal’s 19.1 percent.
He also stated that in 2023, the total taxes or levies collected by the federal, state, and local governments amounted to ₦26.03 trillion.
The lawmaker added that the Joint Tax Board (JTB) indicated that only about 35 million Nigerians pay tax, while only nine percent of companies registered in Nigeria are captured in the tax net.
“This imbalance is unsustainable if we are to adequately fund critical infrastructure needed to build the Nigerian economy to a desirable level.
“Experts have estimated that Nigeria requires $3 trillion (₦1.8 quadrillion) over the next 30 years, which is equivalent to $100 billion annually, to bridge its infrastructure deficit.
“However, our internally generated revenue (IGR) falls significantly short of this amount, leading the government to borrow substantially in order to bridge the funding gap.
“This reality highlights the urgency of implementing tax reforms that will simplify and enhance revenue collection, reduce reliance on borrowing, and drive sustainable development,” Faleke said.
(The Guardian)
