Nigeria’s tax system, one of the most outdated globally, urgently needs reform, according to Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee. Speaking on Channels Television over the weekend, Oyedele called the reliance on old tax laws, such as the 1939 stamp duty law, “embarrassing” and a “big shame.”
“There is so much at stake,” Oyedele emphasized, warning that delays or resistance to reform would severely hinder Nigeria’s economic progress. The reform bill, he explained, aims to create a fairer system benefiting low-income earners, small businesses, and large firms by reducing corporate income tax to encourage investment.
A key issue has been the debate over Value Added Tax (VAT) collection. Some governors advocate for state-level VAT collection, but Oyedele cautioned against this, stating that it could “lead to chaos.” He explained, “If the Supreme Court rules for state collection, states will collect less, businesses will suffer, and the economy will retrogress.”
The proposed reform suggests centralizing VAT collection under the Federal Inland Revenue Service (FIRS) to ensure equitable revenue distribution and improve planning. To address concerns about fairness, the bill proposes adjusting the VAT distribution formula to give states a greater share, with 60% based on derivation, 20% on population, and 20% on equality.
Oyedele also addressed resistance from lawmakers who have not fully read the bill, acknowledging, “Trust is a problem.” The committee aims to build trust by engaging with local authorities and addressing misunderstandings about the proposed changes.
In addition to VAT reform, the bill introduces other measures, including an increase in VAT to 10% by 2025 and a corporate tax rate reduction to 27.5%. It also proposes to streamline tax collection by consolidating federal agencies’ roles to avoid overburdening businesses.
President Bola Tinubu has urged the National Assembly to pass these bills, including the Nigeria Tax Bill, Tax Administration Bill, and Joint Revenue Board Establishment Bill.
Oyedele underscored the importance of passing the reforms to modernize Nigeria’s fiscal system, concluding, “If it doesn’t work, that would be a big shame for our country,” He said.
