*** Says No Better Time Than Now For a Reform
By Mercy Gadia Adi
The federal lawmaker representing Ido-Osi/Moba/Ilejemeje Federal Constituency in Ekiti State, Honourable Kolawole Davidson Akinlayo shared his thoughts on the ongoing tax reform in Nigeria.
According to him, the Nigerian Tax Bill, is a comprehensive legislation aimed at overhauling the country’s tax system.
Fielding questions during an interview on Wednesday at the National Assembly Complex Abuja, Akinlayo explained that the bill seeks to harmonize all taxes in Nigeria into a single, simplified law, making it easier for businesses and individuals to understand their tax obligations.
Speaking about the 4 tax reform bills Akinola explained that one of the bills seeks to decentralize the economy, making the sharing formula based on place of consumption instead of derivation, to achieve an evenly distribution of wealth amongst the 36 states of the federation as is the intention of president Bola Ahmed Tinubu.
” What the president wants to do is to make sure other states develop as well, Because what we are practicing now is that VAT is paid to the Headquarter office of a goods consumed, and most headquaters offices are situated in Lagos, right now lagos is collecting 80% Value of VAT and if we continue like that Lagos would look a country in another country.
“What the new bill is proposing is that, for instance if i buy sugar in Abuja and I pay my VAT in Abuja Abuja should be the state to get the Value of the VAT paid.
Akinlayo also emphasized that a part of the bill adopts a progressive personal income tax system, providing tax relief for low-income earners.
“Incomes below ₦800,000 are completely exempt from tax, while higher earners are taxed progressively according to their earnings,” he explained. This move is expected to reduce the tax burden on low-income earners and promote equity and fairness in wealth distribution.
For corporate entities, the Nigerian Tax Bill reduces the taxable income of companies by increasing deductions allowed from gross earnings. The bill also eliminates the minimum income tax of around 1% of gross earnings imposed on companies that do not declare profit. Furthermore, the corporate income tax rate is set to decrease from 30% to 25% over the next two years.
Akinlayo also highlighted the bill’s efforts to tackle the issue of multiplicity of taxes by introducing a 4% development levy, which will regress to 2% by 2030. This move is expected to simplify tax compliance for businesses and reduce the tax burden on corporate entities.
He further noted that the Tax Bill promotes exports and international trade by zero-rating VAT on exports, alongside additional incentives aimed at boosting Nigeria’s competitiveness in international trade.
Speaking on VAT Akinola noted that the proposed VAT increment is gradual, with a potential increase from 7.5% to 12.5% in five years, and eventually to 15%.
“Nigeria currently pays the least VAT in Africa, and the proposed increment aims to bring the country in line with international standards,” he explained.
Hon.Akinlayo further clarified that the proposed Nigerian Tax Bill aims to consolidate all taxes, eliminating multiple tax collections and streamlining revenue collection. He debunked misconceptions about the bill, stating that it does not intend to take over the jobs of customs, SCC, or NASENI.
He explained that the initial push back against the bill was as a result of sentiments and failure to study the documents. 1He said the bills are proposals and not a fixed law and that what the president has done, was to make a proposal for Nigerians and stakeholders to make their inputs as they seem necessary.
“The proposal means, okay, look at it. This is what I have as regards tax collection in Nigeria. If it’s okay, approve it as it is. If it’s not okay, amend it,” Akinlayo said.
There is no better time for a tax reform in Nigeria than now, and if these bills are accented to, Nigeria will blossom in no distant time, he concluded.