• By Achimi muktar
*Discover how it affects food prices, school fees, and more*
The tax reform bills proposed by President Bola Ahmed Tinubu have ignited a fierce debate across Nigeria. While critics and supporters clash, many remain unaware of the sweeping changes these reforms aim to introduce. From slashing taxes for small businesses to easing the financial burden on low-income earners, here’s everything you need to know—explained in plain terms.
*What’s the Fuss About?*
President Tinubu recently sent four tax-related bills to the National Assembly. These include:
Nigeria Tax Bill,
Nigeria Tax Administration Bill,
Nigeria Revenue Service Establishment Bill,
Joint Revenue Board Establishment Bill.
While these bills seek to modernize Nigeria’s outdated tax laws, they’ve also stirred controversy, with governors and regional leaders sparring over revenue sharing and fairness.
Here’s the good news: the reforms are designed to benefit everyday Nigerians, especially the poor and small businesses.
*Here are 23 things you probably didn’t know about Tinubu’s tax reforms:*
*1. Income Tax Relief for Low Earners*
If you earn ₦800,000 or less annually, you’ll no longer pay income tax—saving ₦84,000 yearly.
*2. Higher Threshold for Maximum Tax Rates*
Only those earning above ₦50 million will pay a 25% income tax rate, unlike the current threshold of ₦3.2 million.
*3. Small Business Tax Exemptions*
Businesses with turnovers below ₦50 million won’t pay income tax—a jump from the current ₦25 million threshold.
*4. Reduction in Corporate Tax Rates*
Medium and large companies will see corporate taxes drop from 30% to 25% by 2026.
5. Elimination of ‘Minimum Tax’
Companies that fail to declare profits will no longer face a mandatory 1% gross earnings tax.
*6. Lower Burden on Big Firms*
A new 2% development levy replaces the current 3.75% in additional taxes—directly funding student loans from 2030.
*7. Changes to VAT Sharing Formula*
States will now receive 55% of VAT revenue, up from 50%, while the federal government’s share drops from 15% to 10%.
*8. Progressive VAT Increase*
VAT rates will rise gradually from 7.5% today to 15% by 2030—but basic necessities like food and medicine remain exempt.
*9. Affordable Food and Essentials*
No VAT will be charged on food items, electricity, school fees, or medical services, ensuring prices stay low for the poor.
*10. Investment Incentives in Gas*
Tax breaks encourage both associated and non-associated gas projects to boost energy supply.
*Revolutionizing Tax Administration*
The Nigeria Tax Administration Bill introduces new ways to ensure compliance and fairness.
*11. Catching Tax Evaders High spenders* (₦25 million/month for individuals, ₦100 million/month for businesses) are flagged for tax audits via bank records.
12. Payment Flexibility
Taxes assessed in foreign currencies can now be paid in Naira at official exchange rates.
*13. Streamlined Collections*
The Nigeria Revenue Service (NRS) will take over tax collection from agencies like Customs, enabling regulatory bodies to focus on oversight.
*14. Tax Refund Guarantees*
Funds for verified tax refunds will be deducted from collections to ensure prompt payments.
Empowering Local Governments and Simplifying Taxes.
The Joint Revenue Board Establishment Bill is equally transformative:
*15. Local Revenue Committees*
LGAs will manage taxes, fines, and rates within their jurisdictions to boost efficiency.
*16. Harmonized Offenses and Penalties*
Tax laws will now have uniform penalties to improve compliance nationwide.
*17. Dispute Resolution*
A Tax Appeal Tribunal will settle disputes, including disagreements over residency for tax purposes.
*18. Taxpayer Advocacy*
A Tax Ombudsman Office will help citizens seek justice if treated unfairly by tax authorities.
*Why This Matters*
Proponents of Tinubu’s reforms argue they are pro-poor, pro-growth, and pro-efficiency. With exemptions for low-income earners and small businesses, alongside incentives for local economic activities, these bills aim to reduce Nigeria’s reliance on oil revenue while fostering a fairer, more inclusive tax system.
*What’s next?*
The bills have passed the Second Reading in the Senate and now await public hearings. While the debate rages on, analysts agree: if implemented correctly, these reforms could transform Nigeria’s tax ecosystem and uplift millions of Nigerians.
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