The Nigerian Senate has passed 2 of the 4 controversial Tax Reform Bills transmitted by President Bola Tinubu in October 2024
Following a closed-door session on Thursday that lasted over an hour, the Senate reconvened to consider the report of its Committee on Finance, presented by its Chairman, Senator Sani Musa.
Senator Musa explained that the Tax Reform Bills were designed to streamline Nigeria’s Tax laws, modernize the Tax framework, and enhance compliance, revenue generation, and alignment with global standards.
During the clause-by-clause consideration, lawmakers passed the Nigeria Revenue Service (NRS) Bill, which seeks to establish a single, autonomous body responsible for all Federal tax collections.
The NRS would absorb the functions currently performed by the Federal Inland Revenue Service (FIRS) and other revenue-generating Agencies.
The Senate also passed the Nigeria Tax Administration Bill, a comprehensive legislative reform aimed at consolidating and updating existing tax laws in line with international best practices and the evolving economic landscape.
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The Senate expunged clauses 87 to 98 of the NRS Bill, which would have permitted States to establish their own internal revenue services.
Clause 147, which was deemed to conflict with the Nigerian Constitution, was also removed.
The Senate also approved that 2% of the total revenue collected by the proposed Nigeria Revenue Service be appropriated by the National Assembly, with the percentage subject to periodic review.
A central point of contention in the Tax reform process has been the Value Added Tax (VAT) rate and its sharing formula.
Although the Senate is yet to take a final decision on VAT-related provisions, the Committee’s report maintains the current 7.5% VAT rate and recommends revisions to the sharing structure, which will be addressed when the remaining Bills are considered.
The Bills passed today are part of a broader legislative effort that affects over 21 existing laws, including significant amendments to the Petroleum Industry Act.
These Bills were the only items listed on the Senate’s Order Paper for the day.
The Senate, however, deferred consideration of the remaining 2 Bills – the Nigeria Tax Bill and the Joint Revenue Board Bill to the next legislative day.
Senate President Godswill Akpabio stated that this was to allow time for the preparation and adoption of the Votes and Proceedings from Wednesday’s session.
President Tinubu’s Tax Reform Bills, submitted in October 2024, have sparked widespread debate across political and economic circles, prompting extensive public hearings and consultations.
(Editor: Ken Eseni)
