Senate Passes Two Tax Reform Bills, Retains VAT at 7.5%
From Our Correspondent
The Senate has approved two out of four major tax reform bills proposed by President Bola Tinubu. However, it rejected a proposal to increase the value-added tax (VAT) from 7.5% to 10%, choosing instead to maintain the current rate.
The approved bills include the Nigeria Revenue Service Establishment Bill, which abolishes the Federal Inland Revenue Service, and the Joint Revenue Board Establishment Bill, aimed at harmonizing tax collection.
The Senate is scheduled to consider and vote on the remaining two bills—the Nigeria Tax Administration Bill and the Nigeria Tax Bill—on Thursday.
The passage of the two bills followed a detailed clause-by-clause examination by the committee of the whole and a third reading on the Senate floor.
President Tinubu introduced these bills as part of his efforts to modernize and overhaul the country’s tax framework.
Senate President Godswill Akpabio commended the progress and stated that the reforms would strengthen governance and enhance revenue collection.
“These bills will add immense value to governance and transform how taxes are collected and distributed in Nigeria,” Akpabio noted.
He also mentioned that the Senate is prepared to extend its session to complete the work on the remaining bills. “We are committed to concluding the outstanding bills tomorrow, even if we have to stay here until 10 PM,” he said.
In addition to rejecting the proposed VAT increase, Akpabio announced that the Senate also dismissed a plan to phase out funding for several agencies, including the Tertiary Education Trust Fund (TETFUND), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI). Instead, the Senate introduced a 4% development levy to sustain funding for these agencies.
“These governmental agencies are crucial for human capital development and the overall economic progress of the country,” he emphasized. “Phasing out their funding could lead to stagnation in education and prevent the nation from advancing in technology.”
According to the bill, the distribution of the development levy will be as follows: TETFUND (50%), Nigerian Education Loan Fund (15%), NITDA (10%), NASENI (10%), National Cybersecurity Fund (5%), and Defence Security Fund (10%). The company income tax rate is set at 30%.
During the plenary session, Deputy Senate President Barau Jibrin praised the lawmakers for their maturity in resolving earlier disagreements.
“It is time to congratulate the entire Senate, particularly the Finance Committee and the Elders Committee, for the wisdom and leadership shown in these bills,” he remarked.
“There were initial disagreements and some rancor, but the Senate, standing firm as the highest assembly in the land, established this committee of elders to address those contentious areas and hear the views of religious leaders, regional organizations, and other stakeholders. Fortunately, thanks to their efforts, we have reached this point where all issues have been resolved.”
The four bills have already been passed by the House of Representatives.
