Tax Reform Bills Near Final Approval

House c’ittee proposes significant amendments to legislation

Modifies key clauses, drops VAT increase, Retains TETFUND, NITDA, NASENI Funding

By Our Reporters

The House of Representatives Committee on Finance has proposed significant amendments to the tax reform bills forwarded to the National Assembly by President Bola Ahmed Tinubu.

Spear News highlights that the committee meticulously examined the bills, making adjustments to numerous clauses, eliminating certain sections, keeping others intact, and incorporating fresh provisions to address emerging concerns.

The committee’s chairman, Rep. James Abiodun Faleke, presented the report on the consolidated tax reform bills to the House during plenary on Wednesday.

It would be recalled that President Tinubu had transmitted four tax reform bills to the National Assembly in October 2024 for consideration and passage. The presentation of the report followed a three-day public hearing and a review of memoranda and stakeholder inputs.

The bills under review include:
“A Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States, and Local Governments; Prescribe the Powers and Functions of Tax Authorities, and for Related Matters (HB.1756)” (Referred: 12/2/2025).

“A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No.13, 2007, and Enact the Nigeria Revenue Service (Establishment) Bill to Establish Nigeria Revenue Service, Charged with Powers of Assessment, Collection of, and Accounting for Revenue Accruable to the Government of the Federation and for Related Matters (HB.1757)” (Referred: 12/2/2025).

A Bill for an Act to Establish Joint Revenue Board, the Tax Appeal Tribunal, and the Office of the Tax Ombud, for the Harmonisation, Coordination, and Settlement of Disputes Arising from Revenue Administration in Nigeria and for Related Matters (HB.1758).”

“A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and for Related Matters (HB.1759).”

Spear News states that, pending any unforeseen developments, the House is expected to start a thorough, clause-by-clause examination of the bills this Thursday.

Key Changes Proposed by the Committee
The committee recommended several amendments, addressing contentious issues such as VAT increases, inheritance tax, and the funding of TETFUND, NITDA, and NASENI.

VAT Increase Dropped:

The committee rejected the proposed VAT increase from 7.5% to 10% by December 2025, 12.5% from January 2026 to December 2029, and 15% from January 2030. Instead, it recommended retaining the current 7.5% rate.

Inheritance Tax Modified:

The committee revised the inheritance tax clause. Initially, estates left by deceased persons were to be taxed. The new proposal states that only heirs who invest inherited estates in income-generating businesses will be taxed on the returns.

TETFUND, NITDA, NASENI Funding Retained:

The committee rejected the proposal to stop funding TETFUND, NITDA, and NASENI by 2030. It recommended continuing their funding and expanding the list of agencies benefiting from the 4% development levy.

VAT Derivation Formula Adjusted:

The committee proposed a 30% VAT derivation based on consumption rather than location, addressing concerns about regional disparities.

Tax Administration Reforms:

The committee recommended extending the deadline for tax authorities to notify individuals of Tax ID refusals from two to five working days. It also proposed a transition arrangement for implementing an Electronic Fiscal System (EFS) for recording and reporting taxable supplies.

Company Tax Rates:

The committee recommended a 30% tax rate for companies, with a reduced rate of 25% for companies in priority sectors.

Stakeholder Reactions

Hon. Bappah Aliyu Misau (PDP, Bauchi) praised the committee for effectively resolving more than 90% of the issues raised during the public hearing. He specifically pointed to the successful handling of key concerns, including the proposed VAT hike, revisions to inheritance tax provisions, and the restructuring of the Joint Tax Board to ensure fair representation.

Despite these advancements, some legislators remain uneasy about certain aspects of the bills. Notably, they expressed reservations about clauses that grant the President extensive authority to exempt companies from tax obligations and permit the seizure of assets without requiring court approval. These provisions, they argue, could lead to potential abuses of power and undermine judicial oversight.

Northern Stakeholders Voice Concerns.

Prior to the public hearing, governors and lawmakers from the Northern region had voiced strong objections to specific elements of the bills. Through extensive consultations and negotiations, a compromise was reached, allowing the hearing to proceed. Some representatives revealed that they had enlisted the expertise of consultants to advocate for the region’s interests, which ultimately led to the removal or modification of several contentious clauses.

Civil Society Raises Alarm
The Centre for Democratic Development Research and Training (CEDDERT) has identified several provisions in the bills as “potentially dangerous.” Among these are sections that grant the President unchecked authority to issue tax exemptions and authorize asset seizures without judicial oversight. The organization cautioned that such measures could exacerbate centralization of power, foster corruption, and infringe on the rights of citizens.

CEDDERT emphasized that these provisions deviate from global best practices, where tax disputes are typically resolved through judicial processes. They also criticized the introduction of special-purpose tax officers, arguing that this could further complicate law enforcement and create opportunities for abuse.

Looking Ahead

The House is scheduled to begin a detailed, clause-by-clause review of the bills on Thursday. Stakeholders remain optimistic that the remaining concerns, particularly those related to executive overreach and citizen protections, will be addressed during this critical phase of the legislative process. The outcome of these deliberations will be pivotal in shaping a fair and effective tax reform framework for Nigeria.