BY JOY ODOR
The House of Representatives Committee on Finance has proposed significant amendments to the Tax Reform Bills submitted to the National Assembly by President Bola Ahmed Tinubu.
The committee’s proposals involve modifying several clauses, removing certain provisions, retaining others, and introducing new elements to address contentious issues.
One major change is the removal of the planned increase in the current 7.5% Value Added Tax (VAT) rate; the committee has recommended that the existing rate remain unchanged.
Additionally, while the original proposal would have taxed the entire estate of a deceased person, the revised provision now stipulates that only the portion of the estate inherited and subsequently invested in a business generating returns will be subject to taxation.
Other modifications include the continuation of funding for agencies such as TETFUND, NITDA, and NASENI, while extending the benefits of the 4% development levy fund to additional agencies.
The committee has also recommended that beneficiary agencies submit their income and expenditure reports to the National Assembly for appropriation.
Clarifications were made regarding VAT returns, with taxable persons now required to submit their returns on or before the 21st day of the following month, and attribution details adjusted to focus on consumption rather than location.
Furthermore, the process for Tax ID registration was revised to extend the notification period for refusals to five working days, with reasons provided.
The committee emphasized the need for a clearly defined Electronic Fiscal System (EFS) for recording and reporting taxable supplies along with a smooth transition arrangement, while also clarifying requirements for monthly returns and company tax rates.
Originally, small companies were to be taxed at 0% and other companies at 27.5% for the 2025 assessment year, with a reduction to 25% from 2026 onward; however, the revised proposal now recommends taxing most companies at 30%, except for those in priority sectors, which would be subject to a 25% rate during the designated period.
Representative Bappah Aliyu Misau (PDP, Bauchi) remarked that over 90% of the contentious issues had been addressed, noting that public hearings provided a clear insight into the nation’s sentiment regarding the bills.
He observed that the proposed VAT increase had been removed, that funding for key agencies would continue, and that the inheritance tax provision had been revised so that taxation applies only to returns from business investments made with inherited assets.
Misau also highlighted that the allocation of VAT derivation had been adjusted to base calculations on consumption, rather than company location, and he noted that the composition of the proposed Joint Tax Board had been restructured to include representatives from all 36 states, along with six executive directors representing the political zones, appointed by the President for renewable four-year terms.
He added that these revisions effectively addressed the previously contentious issues and mitigated concerns over excessive powers.
