Tinubu’s Tax Overhaul Hits Milestone as Nigerian Senate Approves Two Reform Bills, Rejects VAT Hike

The Nigeria Senate gave the green light to two out of four ambitious tax reform bills proposed by President Bola Tinubu, reporting progress in administration efforts to reset the country’s beaten tax system.

But in a clear indication of political sensitivity surrounding the tax policy, legislators rejected the proposed increase in the value added tax of 7.5 to 10%, To choose to offer Minor concessions which would allow complaints in terms of carrying out VAT on fixed assets, general costs and administrative costs.

Approved invoices – The bill on the establishment of Nigeria returned to service and the bill on the establishment of Board Revenue – have occurred a decisive step towards the centralization and professionalization of the tax administration. The first abrogation the Federal Inland Revenue Service (FIRS) for a long time, paving the way for a new income organizationwhile The latter creates a coordination framework to harmonize the tax collection between the federal and infranational governments, a long -standing challenge in the fragmented tax landscape of Nigeria.

Two additional tax invoices, the Nigeria tax administration bill and the Nigeria tax bill should be debated and potentially adopted on Thursday.

The legislative breakthrough occurs almost a year after Tinubu took office with a mandate to repair the slow economy of Nigeria and extend the tax net. His proposals, transmitted to the National Assembly earlier this year, were part of a wider campaign to reform what many experts have described as an ineffective and poorly applied tax regime.

“These bills will add an immense value to governance and will transform the way in which taxes are collected and shared in Nigeria,” said Senate President, Godpabio, on the ground, shortly after the upper chamber adopted the bills following a rigorous clause clause exam. He congratulated the legislators for their discipline and reported that the Chamber was ready to work overtime to conclude the pending legislation.

The Senate pushes the tank tank hike, rather offers the development sample

However, the increase in VAT proposed by Tinubu, supervised by the presidency necessary to increase government revenues, has proven too far for senators, duly given The increase in the cost of living and the widespread public dissatisfaction. By rejecting the hike, the Senate sought to protect Nigerian households already stretched from what would have been another inflationary shock.

Instead, legislators have designed an alternative strategy: a new 4% development levy on certain sources of income, closed to continue financing agencies at the heart of education, technology and national security.

According to the resolution of the Senate, the development levy will be distributed as follows:

• Tetfund – 50%
• Nigerian education loan fund – 15%
• Nitda – 10%
• Naseni – 10%
• National cybersecurity fund – 5%
• Defense security funds – 10%

Akpabio warned that the abolition of financing these agencies, as initially proposed, would have paralyzed vital sectors. He noted that Nigeria cannot afford to undermine the institutions that stimulate innovation, security and the development of human capital.

The decision to preserve their funding also reflects broader concerns about young people unemployment, insecurity and the fragile technological ecosystem of Nigeria.

The long walk towards tax reforms

Road approval to the Senate was filled with friction. The proposed, although technical reforms have triggered the controversy among interest groups and legislators, in particular those who are wary of how tax changes could affect ordinary companies and citizens who are already confronted with high inflation and economic stagnation. Northern leaders were particularly against reforms, alleging that would put the region to a economic inconvenience.

The vice-president of the Senate, Barau Jibrin, highlighted the behind the scenes negotiations which led to the approval of bills, revealing that the Committee of the Ancients played a central role in the resolution of the disputed questions. The Committee would have been committed to religious leaders, regional representatives and other civil society groups to cool tensions and build a consensus.

“It is time to congratulate the entire Senate and, in particular, the Finance Committee and the Elder Committee for Wisdom and Directorate presented in these bills,” said Jibrin, praising the maturity legislators demonstrated in navigation in the legislative labyrinth.

The expected final passage while the house approves the four invoices

The two chambers of the National Assembly are now aligned with the management of Tax reform, the House of Representatives already adopting the four tax invoices. Once the Senate concludes the deliberations On the other two bills, the final versions will be harmonized and transmitted to President Tinubu to assemble.

Many believe that the adoption of these bills would be one of the most substantial revisions of the tax architecture of Nigeria for decades. The reform package should simplify compliance, improve equity and expand the tax base – an urgent objective as an oil income continue The drop and public debt soar.