The Nigerian House of Representatives has shut down a proposed Value Added Tax (VAT) hike from 7.5% to 15% by 2030, keeping the rate unchanged in a move that’s already sparking debate. The decision came as part of an extensive review of the Tax Reform Bills currently before the National Assembly.
Lawmakers also rejected a controversial attempt to reintroduce inheritance tax, a proposal critics claimed would unfairly burden families.
What’s Changing in Nigeria’s Tax System?
The Tax Reform Bills, aimed at overhauling Nigeria’s revenue framework, cover four major areas:
✔ Nigeria Tax Bill
✔ Nigeria Tax Administration Bill
✔ Nigeria Revenue Service (Establishment) Bill
✔ Joint Revenue Board (Establishment) Bill
While the VAT rate remains at 7.5%, the bills introduce key amendments, including:
Limiting the Nigeria Revenue Service’s (NRS) reach – The agency will now focus solely on federal revenue collection, excluding state-level taxpayers.
Reforming the Joint Revenue Board – Strengthening oversight and ensuring tax appeal tribunals operate independently from the Federal Inland Revenue Service (FIRS).
Extending Tax ID processing time – From two to five working days to allow for administrative delays.
Boosting banking transaction thresholds – Individual reporting raised from ₦25M to ₦50M, while corporate transactions now start at ₦250M.
Strengthening tax enforcement – Court orders are now mandatory before authorities can seize assets for unpaid taxes.
Mixed Reactions: Relief or Temporary Victory?
- NACCIMA’s Wait-and-See Approach: The Nigerian Chamber of Commerce says it will hold off on commenting until full details of the bill’s approval are available.
- Civil Society Skepticism: The Movement for Socialist Alternative (MSA) warns Nigerians not to celebrate just yet, arguing that while blocking the VAT increase is a positive step, the larger tax reform framework still favors the wealthy while squeezing everyday Nigerians.
- Labor Unions Call for Action: The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are being urged to demand a higher minimum wage and mobilize against policies that disproportionately affect workers.
What’s Next?
The House of Representatives is expected to deliberate on the final report in the coming weeks. Whether this tax reform will truly benefit the average Nigerian or simply maintain the status quo remains to be seen.
