In an effort to restructure Nigeria’s tax system, the Federal Government has proposed a 25% personal income tax on citizens earning N100 million or more annually. The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, made this announcement during the 30th Nigeria Economic Summit in Abuja. He stressed the need to ease the tax burden on lower-income earners while ensuring that high-income earners contribute more.
“If you earn N100 million a month, we are taking up to 25% from the rich people. That’s because we need to balance the books,” said Oyedele.
The proposed tax reforms, which are set to take effect in January 2025 if approved by the National Assembly, will see middle-income earners with monthly earnings below N1.5 million pay reduced taxes. Meanwhile, individuals with higher incomes will face increased tax rates, capped at 25%, while lower-income earners will be exempted from personal income tax.
In addition to personal income tax reforms, Oyedele revealed that corporate income tax would be reduced from 30% to 25%. Other significant changes include the elimination or reduction of Value Added Tax (VAT) on essential goods like food, health services, and education to reduce the financial burden on lower-income households. However, VAT on non-essential goods and services may rise to compensate for government revenue losses.
Oyedele also criticized indiscriminate tax incentives, arguing that their removal could enhance business productivity without negatively affecting government revenues.
The government remains committed to ensuring a more equitable tax system, focusing on bringing the right individuals into the tax bracket, especially from the informal sector.
