Tinubu’s Tax Storm: Outrage as New Bill Threatens Nigerians with VAT Hikes, Gaming Levy & Telecoms Tax
The Nigeria Tax Bill, officially 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 one of the three bills sent to the National Assembly by President Bola Tinubu on October 3, 2024.
Since its introduction, the bill has sparked protests and debates, with some governors and northern traditional rulers opposing it. Here are 20 key provisions of the bill and how they may affect Nigerians:
1. VAT Increase
- Value Added Tax (VAT) will rise from 7.5% to 10% by 2025, then 12.5% from 2026 to 2029, and 15% from 2030 onwards.
2. VAT Exemptions
- Essential goods and services like food, education, and healthcare will remain VAT-free.
3. Tax Relief for Low-Income Earners
- Individuals earning ₦800,000 or less annually will be exempt from Personal Income Tax (PIT).
4. Progressive Personal Income Tax (PIT)
- The new system will lower tax rates for low-income earners.
5. 5% Tax on Lottery and Gaming
- Section 62 and Schedule 10 introduce a 5% excise duty on lottery and gaming revenue.
6. 5% Telecoms Tax
- A 5% excise tax will apply to telecommunications services, including prepaid and postpaid plans.
7. Higher Exemption for Company Tax
- Businesses earning below ₦50 million will be exempt from Companies Income Tax (CIT), up from ₦25 million.
8. Simplified Tax Processes
- The Nigeria Tax Administration Bill will streamline tax registration, filing, and dispute resolution.
9. Stronger Joint Revenue Board
- A Joint Revenue Board will be created to improve tax collection between federal and state governments.
10. Tax Ombudsman for Fairness
- A Tax Ombudsman will oversee fairness in tax administration and protect taxpayers’ rights.
11. Federal Inland Revenue Service (FIRS) Renamed
- FIRS will be renamed the Nigeria Revenue Service (NRS).
12. New Revenue Sharing Formula
- Federal Government: 10%
- State Governments: 55%
- Local Governments: 35%
13. Mandatory Electronic Invoicing
- Businesses must use electronic invoicing for accurate tax reporting.
14. VAT Fiscalisation System
- A new VAT fiscalisation system will be introduced to improve tax compliance.
15. Penalty for Non-Compliance
- Failure to comply with VAT rules will result in a ₦200,000 fine, 100% of the tax due, and an annual 2% interest above the CBN’s rate.
16. Tax Relief for Entrepreneurs & Self-Employed Individuals
- More tax relief will be available for entrepreneurs and self-employed individuals.
17. Companies Income Tax (CIT) Rate Reduction
- The CIT rate will drop from 30% to 27.5% in 2025 and 25% from 2026 onwards.
18. Small Businesses Exempt from Withholding Tax
- Small businesses won’t be subject to withholding tax on their income.
19. Capital Gains Tax Exemptions
- Profits from selling residential property or land next to it (up to 1 acre) will be tax-free.
20. Development Levy on Companies
- Companies (excluding small and non-resident ones) will pay a development levy:
- 4% (2025-2026)
- 3% (2027-2029)
- 2% (2030 onwards)
Conclusion
This tax bill aims to increase government revenue, simplify tax collection, and support economic growth. While some provisions may lead to higher costs for businesses and consumers, others offer tax relief for low-income earners and small businesses. As the debate continues, Nigerians are encouraged to stay informed about the potential impact of these tax changes.
Tinubu’s Tax Storm: Outrage as New Bill Threatens Nigerians with VAT Hikes, Gaming Levy & Telecoms Tax
