The Special Adviser to the President on Information and Strategy, Bayo Onanuga, confirmed this in a statement on Wednesday.

What’s Changing?

The bills are designed to simplify taxes, reduce duplication, and improve how taxes are collected across all levels of government. Once signed, they will bring major changes to tax operations in the country.

Top government officials, including the Senate President, Speaker of the House, and finance leaders, will witness the signing at the Presidential Villa in Abuja.

The Four Bills Explained

1. Nigeria Tax Bill (Ease of Doing Business):
   This bill merges Nigeria’s many tax laws into one. It reduces the number of taxes businesses face and makes compliance easier.

2. Nigeria Tax Administration Bill:
   It creates a single, clear system for managing taxes at the federal, state, and local levels.

3. Nigeria Revenue Service (Establishment) Bill:
   This replaces the current FIRS law. It sets up a new, independent revenue agency called the Nigeria Revenue Service (NRS). The agency will also handle non-tax revenue and must follow strict rules for accountability.

4. Joint Revenue Board (Establishment) Bill:
   This law encourages teamwork between tax agencies at all levels. It also creates a Tax Appeal Tribunal and a Tax Ombudsman to handle complaints and disputes.

Pushback and Public Debate

These bills were passed after many meetings with business groups, lawmakers, and citizens. However, they have not been without controversy.

Last December, some northern governors rejected the reforms, calling them undemocratic. As a result, the National Economic Council asked for the bills to be reviewed. The process was delayed to allow more consultation.

What’s Next?

Now, with consultations completed and the bills approved by the National Assembly, President Tinubu is moving forward. On Thursday, he will sign the bills into law—marking a major shift in how Nigeria handles taxes.

These reforms are expected to make it easier to do business in Nigeria, improve transparency, and increase confidence in the economy.

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Key Measures in the Reform Package:

• VAT Exemption for Essential Services: The new policy eliminates VAT charges on house rents, public transportation, and renewable energy products. It is part of a broader push to shield critical sectors such as food, healthcare, and education from consumption taxes, with the goal of increasing purchasing power and reducing inequality.

• Driving Inclusive Economic Growth: President Tinubu underscored that the reforms go beyond revenue concerns, focusing instead on fairness and broad-based development. The removal of overlapping tax obligations is intended to support small businesses and encourage their transition into the formal economy.
• Strategic Sector Incentives: The administration also revealed plans for targeted tax incentives aimed at high-impact industries, including manufacturing, agriculture, and technology. The goal, officials say, is to create a more competitive business environment and boost job creation.

These reforms are part of the Tinubu administration’s larger economic strategy, which emphasizes sustainability, equity and investment-led growth. By lowering the cost of essential goods and services, the government hopes to lay the foundation for a more inclusive and prosperous future for all Nigerians.

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The intense three-hour debate laid bare the stark disagreements among lawmakers, who wrestled over the potential consequences of phasing out critical institutions and the constitutionality of certain provisions.

The legislative push, led by Speaker Tajudeen Abbas, saw the passage of four pivotal bills: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. While proponents argued that these reforms would modernize Nigeria’s tax system and enhance revenue collection, dissenting voices raised alarms about their broader implications.

At the heart of the controversy were provisions that could significantly alter the funding and operational structures of major institutions such as the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA). The fear among critics is that the proposed laws might weaken these agencies, potentially disrupting vital services they provide.

House Leader Prof. Julius Ihonvbere defended the bills, emphasizing their necessity in overhauling Nigeria’s outdated tax framework. He credited the Nigerian Governors’ Forum for its input, particularly in adjusting the Value Added Tax (VAT) sharing formula to address earlier concerns. However, despite these assurances, opposition from within the House remained strong.

One of the most vocal critics, Abubakar Fulata of Jigawa State, took issue with the absence of interpretation clauses in most of the bills. He warned that this could lead to misinterpretations and legal loopholes. Fulata also strongly opposed the plan to phase out TETFUND, calling it indispensable to Nigeria’s education sector.

A major point of contention arose around the National Tax Bill’s Development Levy, which would redistribute funding allocations for various agencies. Under the proposed structure, TETFUND’s funding would steadily decline, with its share ultimately being eliminated by 2030. Fulata argued that this move could cripple educational development in Nigeria and called for a reassessment of the provisions.

Further resistance came from Ahmed Jaha, representing Chibok, Damboa, and Gwoza. He criticized the executive’s decision to push the bill forward despite objections from the National Economic Council and governors, particularly from the North. Jaha also took issue with the proposed dual role for Dr. Zach Adedeji as both the Chief Executive Officer and Chairman of the Nigerian Revenue Service, warning that such a concentration of power could lead to conflicts of interest.

Religious and constitutional concerns also emerged in the debate. Jaha vehemently opposed the proposed inheritance tax, arguing that it contradicts Islamic law and other religious principles. He emphasized that under Islamic teachings, inheritance must be distributed strictly among rightful heirs without external interference, making the proposed tax a violation of religious rights.

Despite these fierce objections, supporters of the reform, including Bamidele Salam of Osun, defended the bills, highlighting their potential to decentralize wealth distribution and drive economic growth. He pointed out inefficiencies in the current tax system, arguing that the reforms would eliminate redundancies and encourage investment.

Miriam Odinaka Onuoha added that while taxation is necessary, it must be structured to ensure that wealthier individuals contribute more while safeguarding lower-income citizens. She praised the bill’s employment relief provision, which offers tax exemptions to companies hiring workers earning N100,000 or less, seeing it as a critical step toward job creation.

The debate also touched on Nigeria’s broader economic competitiveness. Kuye Ademorin of Lagos argued that the reforms were long overdue, urging lawmakers to focus on the big picture rather than getting entangled in specific provisions at this stage.

Meanwhile, in a related move, the Senate made amendments to bills concerning regional development commissions and the National Youth Service Corps (NYSC) Trust Fund. Senate President Godswill Akpabio clarified that these revisions were necessary to align the bills’ funding mechanisms with the constitutional provisions governing public finance. This was seen as a preemptive step to avoid legal challenges that could stall their implementation.

With the battle lines drawn, the road ahead for Nigeria’s tax reforms remains uncertain. While proponents see these bills as a game-changer for economic revitalization, opponents warn of potential disruptions to critical sectors and constitutional overreach. As the legislative process continues, all eyes will be on how these reforms evolve and whether lawmakers can strike a balance between revenue generation and safeguarding public institutions.

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The reform, centered on implementing the “derivation principle,” has sparked concerns about its potential impact on Nigeria’s revenue distribution.

The proposal aims to allocate VAT revenue based on where goods and services are consumed and where businesses generating the tax are headquartered. Northern leaders argue that this system could disproportionately benefit the South, where most consumption occurs and major corporations are based, leaving Northern states at a disadvantage.

Senator Kawu Samaila of Kano South expressed concerns, stating, “The challenges affecting economic development in the North go beyond mere tax reforms. We need meaningful dialogue to address these issues.”

Many Northern governors fear the reform would reduce their share of VAT revenue, further exacerbating the economic disparity between regions. Public affairs analyst Dr. Majeed Dahiru explained that their primary concern lies in the derivation model, which could result in some states receiving less revenue. However, he described the proposed system as one of Nigeria’s most progressive revenue allocation policies, potentially extending beyond VAT to other taxes.

Proponents of the reform argue that the current system is unfair, as states that restrict certain goods, like alcohol, still benefit from VAT generated by those products in other regions. Baba Yusuf, a policy analyst, criticized the Northern elite’s opposition as short-sighted, stating that the derivation principle could stimulate productivity and fairness.

“The transactional approach by Northern elites overlooks the long-term benefits of linking revenue to actual consumption. This rent-seeking mindset won’t drive the nation forward,” Yusuf remarked.

While the reform has its advocates, critics like Dr. Muda Yusuf, former Director General of the Lagos Chamber of Commerce and Industry, suggest that the opposition is more political than economic. He noted, “The South generates most of the VAT, so it’s natural for the North to oppose a system that reallocates revenue based on derivation. This issue must be managed carefully to avoid further regional tensions.”

The reform debate has also highlighted broader public distrust in government policies. Dr. Ibrahim Zikirullahi, Executive Director of the Resource Centre for Human Rights and Civic Education, argued that citizens view such reforms with skepticism due to a lack of transparency.

“From subsidy removal to increased taxes, Nigerians see reforms as measures to extract more without tangible benefits. People no longer trust the government’s intentions,” Zikirullahi said.

Despite the heated debate, calls for dialogue persist. Senator Samaila urged lawmakers to engage all stakeholders and address concerns to find a balanced solution. “This process requires discussion, persuasion, and understanding to reach a consensus that benefits all Nigerians,” he said.

The outcome of the tax reform bill will shape Nigeria’s economic future and could redefine its revenue-sharing framework. Whether the North and the Federal Government can find common ground remains uncertain, but the stakes in this debate highlight the urgent need for a more equitable fiscal policy.

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