By Ali Elias
After months of deliberation, the House of Representatives has passed the four tax reform bills transmitted by President Bola Tinubu in October 2024. The bills, which aim to overhaul Nigeria’s tax administration system, were approved on Tuesday during the third reading in the lower chamber of the National Assembly.
The passage follows last Thursday’s consideration and approval of the House Committee on Finance’s report, which incorporated recommendations from public hearings and stakeholder engagements over the past three months. The process involved receiving memoranda from industry experts, business groups, and state representatives concerned about the impact of the reforms.
During Tuesday’s plenary session, House Leader Julius Ihonvbere moved for the bills to be read for the third and final time, stating:
“Mr. Speaker and honourable colleagues, I move that the bill for an Act to provide for the assessment, collection of, and accounting for revenue accruing to the federation, federal, states, and local governments, prescribing the powers and functions of tax authorities, and for related matters be read for the third time.”
He then proceeded to move for the reading of additional bills, including:
- A bill to repeal the Federal Inland Revenue Service (FIRS) Act (2007) and establish the Nigeria Revenue Service, granting it expanded powers for tax assessment, collection, and accountability.
- A bill to establish the Joint Revenue Board, the Tax Appeal Tribunal, and the Office of the Tax Ombudsman, aimed at improving dispute resolution and coordination within the tax system.
- A bill to repeal multiple existing tax laws and consolidate them into a single Nigeria Tax Act, simplifying the taxation of income, transactions, and financial instruments.
With Speaker Tajudeen Abbas presiding, the bills received overwhelming approval from lawmakers and were passed.
A Long Journey to Passage
The tax reform bills have undergone significant scrutiny since their introduction. Initially met with resistance, the House delayed its deliberations for nearly three months to allow for public hearings and expert reviews. Stakeholders, including business associations, financial experts, and state governments, voiced concerns over the potential burden on businesses and the revenue-sharing formula between federal and state governments.
Despite these delays, the bills gained momentum in the last three weeks, with lawmakers finally prioritizing their passage. The process now moves to the Senate, which must approve the bills before they are sent to President Tinubu for assent. If there are discrepancies between the Senate and House versions, a harmonization process will take place before final approval.
Implications for Nigeria
If signed into law, these bills will mark one of the biggest tax reforms in recent Nigerian history. The Nigeria Revenue Service will have stronger enforcement powers, potentially boosting government revenue while streamlining tax compliance. The establishment of a Tax Appeal Tribunal could also reduce disputes and litigation over tax matters, creating a more transparent and investor-friendly tax environment.
However, opposition remains, particularly from lawmakers in northern Nigeria, who have raised concerns about the potential economic impact on their states. Some northern governors have called for further consultation, arguing that the changes could disrupt existing revenue streams and place an undue burden on businesses and individuals. Despite the pushback, the administration insists that the reforms will improve efficiency, reduce tax evasion, and create a more equitable system for all Nigerians. The next few weeks will be crucial as the bills advance through the legislative process and await President Tinubu’s final decision.