Special Adviser on Tax Policy to the Chairman of the Tax Reforms Committee, Mr. Mathew Osanekwu, disclosed this in Abuja on Wednesday during a media workshop. He explained that amendments to the VAT Act empowered the Federal Inland Revenue Service (FIRS) to bring non-resident companies offering services in Nigeria into the tax net.
“These are not Nigerian entities, yet they now pay VAT under Section 10 of the VAT Act. They are registered in Nigeria and have been appointed as agents of collection,” Osanekwu stated, adding that the move aligns with global best practices and ensures Nigeria benefits from taxes on services consumed locally but delivered by foreign firms.
Also addressing the event, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Professor Taiwo Oyedele, stressed that President Bola Tinubu’s ongoing tax reforms have not introduced any new taxes, contrary to public speculation.
According to him, the reforms are designed to ease the burden on low- and middle-income earners while promoting fairness and equity. He noted that many levies currently debated, including the five per cent fuel surcharge, are not new but long-standing provisions predating the present administration.
“It’s not a new tax. Some claimed it was being proposed, but that is incorrect. People believe this president has introduced tax after tax, but I challenge anyone to point to a single newly created tax,” Oyedele said.
He recalled that in July 2023, just two months into office, President Tinubu signed four executive orders suspending taxes hurriedly introduced by the previous administration, such as excise duties on plastic products and vehicle importation. “Many Nigerians may not know this because those taxes never took effect. They were suspended and later removed,” he added.
On the much-debated Cybersecurity Levy, Oyedele clarified that it was enacted years ago and did not originate under Tinubu’s administration.
The new reforms, scheduled to take effect in January 2026, are aimed at overhauling Nigeria’s weak tax system, broadening the revenue base, and improving compliance. With a tax-to-GDP ratio of about 10.8 per cent—far below Africa’s average of 16 per cent and the global benchmark of 30 per cent—Nigeria currently ranks among the lowest globally.
Under the reforms, personal income tax thresholds will be adjusted to exempt Nigerians earning less than ₦800,000 annually, while small businesses making under ₦100 million yearly will enjoy a 0 per cent corporate tax rate.
“This is the most progressive tax reform Nigeria has ever implemented. It eliminates taxes on the poor, reduces pressure on the middle class, and fairly targets higher earners,” Oyedele said.
He further revealed that Nigeria’s economy, as of May 2023, was “on the verge of collapse,” weighed down by subsidy-induced debts, unpaid forward contracts, and dwindling reserves at the Nigerian National Petroleum Company Limited (NNPCL). With only about 200,000 barrels of crude free from pre-sales, the fiscal system was “running on fumes.”
“Continuing to fund subsidies with borrowed money tied to future crude sales would have triggered a fuel import shutdown, much like the crisis in Sri Lanka,” he warned.
Oyedele concluded by posing a reflective question: “People may ask if life is better now than two years ago. The real question is : would it have been better today if these reforms had not been implemented?
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