By Oyetola Muyiwa Atoyebi SAN, FCIArb. (U.K.)

INTRODUCTION

The tax regime in Nigeria is made up of a complex web of disjointed tax laws which leave much to be desired in terms of efficiency and effectiveness both in administration and in achieving the nation’s fiscal policy goals. Sequel to this, President Bola Ahmed Tinubu GCFR established the Fiscal Policy and Tax Reforms Committee in August 2023 to address the pressing need for comprehensive tax reform in Nigeria. The committee, chaired by the tax expert, Mr Taiwo Oyedele, was tasked with producing recommendations aimed at overhauling the nation’s tax system and achieving fiscal policy goals. Recently, the President transmitted four tax reform bills to the National Assembly proposing significant changes to the face and character of the tax landscape. The tax reform bills together represent the comprehensive efforts and recommendations of the Presidential Fiscal Policy and Tax Reforms Committee.

The Nigeria Tax Bill (from now on referred to as the NTB) is a comprehensive piece of legislation that seeks to outline all taxes in the country hitherto administered by different laws and compress them into a single simplified law. Most importantly, the NTB vests upon the Nigeria Revenue Service (expected to succeed FIRS) powers to collect all national taxes, including royalties hitherto collected by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and excise duties, import VAT etc, hitherto collected by the Nigeria Customs Service.

The Tax Bills are:

1. The Nigeria Tax Bill (NTB) 2024
2. The Nigeria Tax Administration Bill (NTAB)
3. The Nigeria Revenue Service (Establishment) Bill (NRSEB); and
4. The Joint Revenue Board (Establishment) Bill (JRBEB).

The enactment of the NTB will lead to the repeal of 11 laws, while 13 other laws will experience consequential amendments. The NTB will also revoke one subsidiary legislation and consequential amendments on two other subsidiary legislations. The laws that would be revoked once the NTB comes into effect (as currently proposed) include:

1. Capital Gains Tax Act
2. Companies Income Tax Act
3. Casino Act
4. Deep Offshore and Inland Basin Act
5. Industrial Development (Income Tax Relief) Act
6. Income Tax (Authorised Communications) Act
7. Personal Income Tax Act
8. Petroleum Profits Tax Act
9. Stamp Duties Act
10. Values Added Tax Act and
11. Venture Capital (Incentives) Act

The existing legislation that will witness consequential amendments include:

1. The Petroleum Industry Act, No 6. 2021 (the areas to be deleted in the PIA include parts I – X of chapter four; the Fifth and Sixth Schedule; paragraphs 6, 9, 10, 11 and 12 of the Seventh Schedule; and subparagraph 6 of paragraph 14 of the Seventh Schedule.
2. The Nigerian Export Processing Zones Act (sections 8 and 18(1)(a) deleted).
3. The Oil and Gas Free Trade Zone Act (sections 8 and 18(1)(a) deleted).
4. The National Information Technology Development Agency Act (sections 1, 2, and 3(3) deleted).
5. The Tertiary Education Trust Fund (Establishment, Etc.) Act (sections 1, 2, and 3(3) deleted).
6. The National Agency for Science and Engineering Infrastructure (Establishment) Act (section 20(2), paragraph b(i) and b(ii) deleted).
7. The Customs, Excise Tariffs, Etc. (Consolidation) Act (section 21(2) deleted).
8. The National Lottery Act (sections 35A, 35B and 35C deleted).
9. The Nigerian Minerals and Mining Act (sections 28 and 33 deleted).
10. The Nigeria Start-up Act (sections 25(2), (3), (4) and 29(3) deleted).
11. The Export (Incentives and Miscellaneous Provisions) Act (section 11(1) deleted).
12. The Federal Roads Maintenance Agency (Establishment, Etc.) Act (section 14(1)(h) deleted).
13. The Cybercrime (Prohibition, Prevention, Etc.) Act (subsections (2)(a) and (4) of section 44 and the Second Schedule are deleted).

For the subsidiary legislations, the Value Added Tax Act (Modification) Order 2021 will be revoked, while the Company Income Tax (Significant Economic Presence) Order 2020 will be amended by deleting paragraph 2 even though the parent legislation, the Company Income Tax, would be repealed. Finally, the Petroleum (Drilling and Production) Regulations 1969 would be amended by deleting regulations 60B, 60C, 61(1), (2), (4) and 62.

Crucially, the Nigeria Tax Bill included a supremacy clause in Section 202, part of which states that” this Act shall take precedence over any other law with regards to the imposition of tax, royalty, levy, excise duty on services or any other tax, where the provisions of any other law is inconsistent with the provisions of this Act, the provisions of this Act shall prevail and the provisions of that other law shall, to the extent of the inconsistency, be void.” This clause effectively elevates the NTB to be Nigeria’s supreme legislation on taxes.^[1]

This Article appraises the four Tax Bills highlighted above with particular focus on the Nigeria Tax Bill, which seeks to harmonize all the major taxes such as corporate income tax, personal income tax, and value-added tax etc., discussing key provisions and significant changes.

THE NIGERIAN TAX BILL AT A GLANCE

As a comprehensive tax legislation, the NTB harmonizes all tax laws in the country into a more simplified and manageable single piece of legislation. Section 1 of the NTB^[2] provides that the objective of the Act is to provide a unified fiscal legislation governing taxation in Nigeria.

Hence, various taxes which were previously administered under different tax legislations are by the provisions of the NTB unified and compressed into one simplified law and administered accordingly. This simplification is intended to ease compliance for businesses and individuals, making it easier for them to understand their tax obligations. In addition, the unification and simplification of our tax laws which the NTB promises is motivated by the need to engender efficiency and effectiveness in tax administration while eradicating conflicts and the multiplicity of tax laws that the current tax regime is plagued with.

AIM OF THE BILLS INCLUDE:

1. Address the challenge of multi-layered taxation
2. Consolidate various legal frameworks relating to taxation
3. Expand the country’s tax base
4. Generate sustainable revenue streams for national development
5. Address complexities of the current tax system.
6. Enhance tax-compliance.

SIGNIFICANCE OF THE NTB TO INDIVIDUALS, CORPORATE ENTITIES AND STATES

TO INDIVIDUALS

Contrary to most speculations on social media, the NTB adopts a progressive personal income tax system and provides tax relief for low-income earners. Particularly, incomes below (800,000.00) eight hundred thousand naira are completely exempted, and higher earners are taxed progressively according to their earnings.^[3] It follows, therefore, that the tax burden on low-income earners is reduced, and that the tax burden is generally spread to reflect equity and fairness in wealth distribution. The annual tax rate, as outlined in the Fourth Schedule of the bill, is as follows:

a. First N800k – 0%

b. Next N2.2m – 15%

c. Next N9m – 18%

d. Next N13m – 21%

e. Next N25m – 23% and

f. Above N50m – 25%

Before now, the personal income tax rates for different bands of annual income are as follows:

a. First N300k – 7%

b. Next N300k – 11%

c. Next N500k – 15%

d. Next N500k – 19%

e. Next N1.6m – 21%

f. Above N3.2m – 24%

A glance at the two sets of rates shows that while currently a low-income earner who earns N25,000 monthly, which translates to N300,000 annually, is required to pay 7% income tax, the new rates proposed in the Nigeria Tax Bill exempts individuals who earn N800,000 or less annually from paying any income tax. In effect, every minimum wage earner in Nigeria would be exempted from personal income tax.

However, with the new provisions in Section 28 of NTAB, financial institutions are now mandated to furnish tax authorities with details of individuals whose monthly cumulative transactions amount to N25 million or more. This would bring more high-income earners into the tax net.

Also, the Bill progressively redesigned the capital gains tax regime by exempting some forms of capital gains from taxation and, in other cases, raising the gain threshold before imposing a capital gains tax. For example, Section 51 of the bill exempts an individual from paying tax on the proceeds of the sale of his residential property or land adjoining his residential property up to a distance of 1 acre.

In Section 50, the bill exempts compensation paid to individuals for personal injuries, such as loss of employment, defamation, libel, slander, etc., from capital gains tax once the amount is N50 million or below. Above N50 million, only the excess constitutes chargeable gains. The current provision of the subsisting Capital Gains Tax Act is that compensation for loss of office, etc, is subject to capital gains tax on the portion of the income above N10 million at 10%.

TO CORPORATE ENTITIES

The Bill aims to ensure ease of doing business, which has long been a hurdle in Nigeria’s economic growth. Businesses, particularly small and medium enterprises (SMEs), have historically struggled with the complex web of tax regulations. By streamlining tax rules, the Nigeria Tax Bill 2024 simplifies compliance, enabling businesses to focus more on innovation and expansion rather than wading through bureaucratic red tape. In doing so it creates a more conducive environment for entrepreneurship and investment.

The Bill in Section 20(1)(a)-(l) also indirectly reduces the taxable income of companies by increasing the deductions allowed from the company’s gross earnings before ascertaining the company’s profit, which is eventually taxed. The bill also eliminates a minimum income tax of around 1% of gross earnings hitherto imposed on companies that did not declare profit.

For corporate entities, the NTB pursuant to Section 56^[4] provides for a reduction of the current 30% rate for corporate income tax, and proposes 27.5% in 2025 and 25% in 2026, while completely exempting small companies. This significantly reduces the tax obligation of corporate bodies, and according to research, is rather conservative compared to 27% and 30% rates in sister African countries like South Africa and Kenya.^[5] Additionally, the NTB raises the threshold for corporate tax emption from 25 million naira to 50 million naira in annual turnover, thereby exempting many small businesses from corporate tax.^[6] Furthermore, the NTB tackles the problem of multiplicity of taxes for corporate bodies by harmonizing multiple levels of taxes by introducing a 4% development levy which will regress to 2% by 2030.^[7]

The bill went further in Section 59 to harmonise all the special deductions on companies’ profit (different from the profit tax) into a single development levy that is expected to progressively decline from a rate of 4% in 2025 and 2026 assessment years to just 2% from 2030. The three direct annual deductions on companies’ profit consolidated into a one-off development levy by the bill include:

a. Tertiary Education Tax – as of today, companies are required by the TETFUND Act to pay 2% of their annual assessable profit as tertiary education tax into TETFUND;

b. NASENI Levy – apart from the deduction of 3% of the total revenue accruing to the Federation Account, the National Agency for Science & Engineering Infrastructure (NASENI) Act also mandates FIRS to collect 0.25% of the turnover of companies and firms with income or turnover of N4,000,000 (Four Million Naira) and above; and

c. Information Technology Tax companies with an annual turnover of N100 million or more who are engaged in banking and other financial activities; insurance activities; pension fund administration; GSM service providers and telcos, as well as cyber and internet service providers, are required by the NITDA Act to pay 1% of their profit before company income tax (CIT) as information technology tax annually to the National Information Technology Development Agency (NITDA) Nigeria Fund (NITDF).

Nigerian Education Loan Fund’s (NELF) primary funding source is through the deduction of 1% of all taxes, levies and duties collected by FIRS and not necessarily extra direct deductions from companies’ profits.

However, in the Nigeria Tax Bill, the NELFUND is the greatest beneficiary of the development levy. According to section 59(2), the development levy to be collected by NRS (i.e. FIRS) at progressively declining rates from 2025 shall be distributed as follows:

a. Tertiary Education Trust Fund (TETF) will receive 50% of the total development levy in 2025 and 2026 (rate of 4%). In 2027, 2028 and 2029, TETFUND will receive 66% of the total development levy collected (the levy rate declines to 3%). From 2030 and above, TETFUND will cease to receive any share of the development levy.

b. The Student Education Loan Fund will receive 25% of the development levy in 2025 and 2026, 33% in 2027, 2028, and 2029, and 100% from 2030 onwards. This would now be 2% of the assessable profits of all companies (except small companies and non-resident companies).

c. The National Information Technology Development Fund will receive 20% of the development levy in 2025 and 2026 and 0% from 2027 onwards.

d. The National Agency for Science and Engineering Infrastructure (NASENI) will receive 5% of the development levy in 2025 and 2026 and 0% from 2027 onwards.

For most companies, the Nigeria Tax Bill is coming to harmonise their taxes into a maximum of two (income tax and development levy) with a maximum total rate of 27% (25% profit tax and 2% development levy) for the biggest companies from 2030 instead of a top rate of 33.25% they currently pay, which is a relief for businesses.

Also, the Nigeria Tax Bill effectively handed over the revenue collection duty of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) to the NRS (FIRS). The Seventh Schedule of the Nigeria Tax Bill prescribed the royalties all production of petroleum (from inland basin, onshore, offshore and deep water) would be subjected to, which are to be collected on behalf of the Federation by the NRS (FIRS) with the royalties so collected by the NRS administered in accordance with provisions of the Nigeria Tax Administration Bill (Act).

TO STATES

The notable implication of the tax bills to the States is the changes regarding revenue sharing generated from Value Added Tax (VAT). Pursuant to Section 77 of the Nigerian Tax Administration Bill, the new sharing formula has the States and Local Governments receiving the bulk of the VAT revenue, thereby reducing the existing quota accruable to the federal government. Precisely, 55% and 35% of the VAT revenue is accruable to the State and Local Governments respectively, while 10% goes to the federal government.

While this sharing formula represents fiscal federalism, it is noteworthy to state that the VAT derivation model pursuant to Section 77^[8] which potentially redistributes revenues amongst state governments equitably, incurs significant losses to some state governments. Based on the 60% derivation model, states that contribute more in VAT revenue will earn more while states that contribute less might earn significantly less.

BENEFIT TO LAWYERS

1. ADVISE ON COMPLIANCE AND REGULATORY SERVICES: The introduction of the new tax Bill means an increase in the demand for legal services related to compliance and regulatory issues. Lawyers will be essential in guiding businesses and individuals on what the new tax Bill is all about and how to navigate the tax law and structure their businesses efficiently to ensure compliance and avoid penalties, thus creating a business opportunity for lawyers.
2. TAX DISPUTE RESOLUTION: The unification of the various existing tax laws into a more coherent and consolidated system has significant advantage for lawyers. A unified Tax law means that lawyers can quickly identify the applicable rules when briefed on tax-related matters, helping lawyers to conduct dispute resolution more efficiently and reducing the complexity involved in representing clients in tax-related matters. Lawyers will no longer have to navigate through a maze of different legislations which can occasion overlooking important provisions.

OTHER NOTABLE HIGHLIGHTS OF THE TAX REFORM BILLS

In line with the aims of the bills to address the challenge of multi-layered taxation, expand the tax base, simplify and harmonize various tax legislations, and generate sustainable revenue streams for national development, the following are notable highlights of the bills:

1. Establishment of the Nigeria Revenue Service (NRS) and Joint Revenue Board (JRB): The tax reform bills particularly the Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board (Establishment) Bill establish the NRS and JRB respectively.^[9] Pursuant to the NRSEB^[10] the NRS replaces the FIRS and performs a broader role of revenue administration in Nigeria, and also drives collaboration with subnational governments and MDAs. In the same manner, the JRBEB established the JRB to replace the current Joint Tax Board (JTB) with an enhanced role for cooperation and tax harmonization. Additionally, the bill also established the office of the tax ombudsman to protect taxpayers and ensure tax simplification.

2. Promotion of Exports and International Trade: Exports of goods, services, and intellectual property will benefit from zero-rated VAT alongside additional incentives aimed at boosting Nigeria’s competitiveness in international trade. By eliminating VAT on exports, the new law provides a fertile ground for international trade, support for local industries in accessing global markets, and attracting foreign investment.

3. Simplifying and Rationalising Taxes: Over 50 nuisance taxes are to be repealed, with remaining levies harmonised into a few number of taxes. Corporate income tax rates will reduce from 30% to 25% over the next two years, and earmarked taxes on companies will be replaced with a streamlined single levy. Further, essential goods and services, such as food, education, and healthcare, will be subject to 0% VAT, while rent, public transportation, and renewable energy will also be VAT-exempt.

4. Enhancing Business Competitiveness: Businesses will gain from input VAT credits on assets and services, alongside the removal of minimum tax requirements for companies with low margins or those reporting losses. These changes will reduce production costs and foster increased investment activity.

5. A Tax System Based on Equity and Fairness: the bills implement progressive rates for personal income tax, VAT, and capital gains tax, ensuring protection for low-income earners. Additionally, taxes on foreign currency transactions will be payable in naira, simplifying compliance for businesses and alleviating pressure on the exchange rate.

6. Equity Among States: VAT revenue will be allocated to states using a fairer model that rewards their actual economic contributions, replacing the current system that disproportionately benefits states hosting corporate headquarters where VAT remittances are typically made.

7. Tax Accountability and Transparency: With the establishment of the Tax Ombudsman vulnerable taxpayers are protected thereby ensuring equity and fairness in tax administration.

CONCLUSION

The tax reform bills mark a remarkable paradigm shift from the current tax regime putting an end to the complex and multi-layered tax system with its consequent lapses and inefficiencies. In concert, the tax reform bills foster economic equity, encourage exportation, extend the tax net to reflect current global trends and create a business-friendly environment to attract local and foreign investments. The bills further strengthen fiscal federalism and facilitate cooperation between taxpayers, subnational governments and MDAs for a vibrant and prosperous economy.

1. ProShare. President Tinubu’s Tax Reform Bills Under a Microscope. Avaliable at https://proshare.co/articles/president-tinubus-tax-reform-bills-under-a-microscope?menu=Economy&classification=Read&category=Taxes%20%26%20Tariffs accessed 6^th December 2024. ↑
2. NTB 2024, s 1. ↑
3. Ibid, section 58 and the Fourth Schedule. ↑
4. NTB 2024, s 56. ↑
5. Opeyemi B., ‘Five Takeaways from Tax Reform Bills’. Punch (December 3^rd, 2024) <https://punchng.com/five-takeaways-from-tax-reform-bills/ > accessed 5^th December 2024. ↑
6. NTB 2024, s 203. ↑
7. Ibid, s 59. ↑
8. Nigeria Tax Administration Bill, s 40. ↑
9. Nigerian Revenue Service (Establishment) Bill, s 3 and the Joint Revenue ↑
10. Ibid. ↑

By Ebun-Olu Adegboruwa

The United Nations declared December 10 every year as International Human Rights Day, mainly to highlight the rights now recognized globally as enuring to and enjoyed by human beings by virtue of their humanity. Although there is still so much ground to cover in the areas of protection of human rights, the decision to set aside a day for this purpose has helped in no small measure to draw global attention to the issue. I was one of the guest speakers of the Human Rights Committee of the Premier Bar on December 10, 2024, where I shared my thoughts on the topic.

Introduction:

According to António Guterres, the United Nations (UN) Secretary-General, “human rights are under assault… This year’s [2024’s] theme reminds us that human rights are about building the future — right now… We must stand up for all rights – always.” Guterres’ bird’s-eye view on the global crises against HRs from the vintage of global leadership undoubtedly provides us with a global big picture which is a true reflection of the stark reality of the crises beleaguering HRs right from the pinnacle of the intercontinental stage, through the international, down to national/local scenes. Guterres’ observation is an echo of this year’s theme: Our Rights, Our Future, Right Now.

At the intercontinental and international scenes HRs crises of epic proportions as seen, for instance, in the outrageous wars involving Russia and Ukraine, Israel and Gaza/Hezbollah and allied Middle Eastern forces; together with other sundry abuses of HRs are blood-cuddling to say the least. Back home in Nigeria, the incidences of decimation of HRs through indiscriminate destruction of lives and property through acts of terror, political crimes, banditry, kidnapping, grievous sexual assaults, domestic violence, etc. give us all a reason to worry. However, in a manner of speaking, Human Rights (HRs), with its global crusade has come a long way. Indeed, it is no longer the infant it once was, though we are yet to see it mature into the adult we all hope it ought to be. In the meantime, let us commemorate a milestone of an HRs global movement, albeit in its adolescence. Shall we?

Conceptual clarifications on key terms:

Rights: The concept of rights, as is typical with most legal concepts, is as multifaceted and poly-dimensional in meaning as there are jurisprudential schools of thought. To begin with, the Black’s Law Dictionary defines rights as something that is just, morally correct, and in accordance with ethical principles or the rules of positive law. It also defines a right as the capacity to control the actions of others with the assistance of the state. Without necessarily allowing ourselves to descend into the depths of the wells of a jurisprudence class on the concept of rights in all its academic nuances, we may further explore a few classical definitions of the most notable legal philosophers of global repute within the realms of jurisprudence.

Hugo Grotius (1583–1645) often considered as the father of international law defined a right as a “moral quality of a person, making it possible to have or do something lawfully.” Immanuel Kant (1724 – 1804) describes rights as the “capacity to constrain others in accordance with universal laws of freedom.” On his own part, Jeremy Bentham (1748–1832), dismissing the idea of natural rights, saw rights rather as creation of law, deriving existence and legitimacy from legal systems rather than from moral or natural law. From his positivist standpoint, John Austin (1790–1859) defined a right as a legally enforceable claim. He viewed rights as rooted in the commands of a sovereign and contingent on the existence of law. H.L.A. Hart (1907–1992), on his part, argued that a right is a protected interest or choice that individuals can exercise. His emphasis was on the connection between rights and duties. Wesley Hohfeld (1879–1818) espoused the relational and reciprocal nature of rights.

According to him, rights are a system of jural relations, such as claims, duties, powers, and immunities. The above definitions cut across Natural, Positivist, Utilitarian, etc viewpoints. A more contemporary approach, however, would leave us with the notion that rights encompass moral principles, enforceable claims, or relational constructs or structures ensuring justice and fairness; hence the axiom ubi jus, ibi remedium.

Human rights: Putting it in its simplest expression, HRs may be defined as the freedoms, immunities and benefits that, according to modern values, all human beings should be able to claim as a matter of right in the society in which they live. According to the UN, HRs may be defined as: Rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status. Human rights include the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, and many more. Everyone is entitled to these rights, without discrimination.

Certain cardinal pillars of HRs as espoused by the UN include:

Universality: All people are born with the same rights, regardless of their race, sex, nationality, ethnicity, language, religion, or any other status; Inalienability: People’s rights can never be taken away; Indivisibility: All rights are equal in importance and none can be fully enjoyed without the others, Interdependence: All rights are related and must be treated as such;

Fundamentality: Human rights include the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, and many more and Govern how people live: Human rights govern how individuals live in society and with each other, as well as their relationship with the State.

Human rights vs. fundamental rights:

The distinction between Human Rights (HRs) and Fundamental Rights (FRs) is only a little short of the distinction between six and half a dozen in that both concepts refer largely to the same substance. Traditionally, the term FRs is used in a constitutional context whereas the term HRs is used in international law.

By Order 1 Rule 2 of the Fundamental Rights (Enforcement Procedure) Rules, 2009 ”Fundamental Right” and “Human Right” are defined in the following manner:- “Fundamental Right – means any of the rights provided for in Chapter IV of the Constitution, and includes any of the rights stipulated in the African Charter on Human and People’s Rights (Ratification and Enforcement) Act. Human Rights – includes fundamental rights.

Eso, J.S.C. in Ransome-Kuti v. A-G. Federation, (1985) LPELR-2940(SC) on the nature and meaning of FRs, has this to say: …What is the nature of a fundamental right? It is a right which stands above the ordinary laws of the land and which in fact is antecedent to the political society itself. It is a primary condition to a civilized existence and what has been done by our constitution since independence, starting with the Independence Constitution that is: the Nigeria (Constitution) Order in Council 1960 up to the present Constitution that is the Constitution of the Federal Republic of Nigeria, 1979 (the latter does not in fact apply to this case: it is the 1963 Constitution that applies) is to have these rights enshrined in the Constitution so that the rights could be “immutable” to the extent of the “non-immutability” of the Constitution itself. [Emphasis supplied].

As such, FRs are those HRs trapped and domiciled or better still, entrenched within the documentary four walls of a Constitution or statute. HRs, on the other hand, extends beyond FRs, and embraces all those God-endowed rights intrinsic to the human person by virtue of his humanity. In our Nigerian context, the locus of the FRs is Chapter IV of the Constitution comprising Sections 33 to 46 thereof. FRs may also be found in the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act.

A brief historical background on the UDHR:

The Universal Declaration of Human Rights (UDHR) was adopted by the United Nations (UN) General Assembly on the 10th of December, 1948. Like the UN itself, UDHR rose from the ashes of World War II. When it was adopted in 1948, much of the world was still recovering from the sore wounds of the deadliest conflict in history, which claimed more than 60 million lives.

In the aftermath of such unprecedented death and destruction of lives and property, the world turned to diplomacy to make sure history would not repeat itself. Nations came together for the first time to publicly declare the fundamental freedoms that belong to all of us. The Commission on Human Rights was set up, chaired by Eleanor Roosevelt, the First Lady of the United States of America (from 1933 to 1945) and tasked with the responsibility of composing the UDHR. Roosevelt asserted the Declaration would reflect more than Western ideas; to accomplish this, the Human Rights Commission was made up of members from various cultural and legal backgrounds from all around the world, showing respect for differing cultures and their customs while also ensuring each region had a hand in creating the document. Under Roosevelt’s leadership, the diverse commission was able to craft the UDHR in a unique and culturally competent way.

The UDHR contains a preamble and 30 articles outlining our most basic birth rights, including protection against torture, inhumane treatment, cruel punishment, slavery, and servitude. It covers both civil and political rights and economic, social and cultural rights. The document heralded a new chapter of human history.

By Kenneth Okonkwo

Comprehensive tax reforms in Nigeria is long overdue. Under existing laws, taxes like Personal Income Tax (PIT), Company Income Tax (CIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Value-Added Tax (VAT), Tertiary Education Tax (TET), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks. The proposed reforms seek to consolidate these numerous taxes, integrating PIT, CIT, CGT, PPT, VAT, TET, excise duties, etc, into a unified structure to reduce administrative fragmentation.

While there may be differences in approach to the understanding of the specific provisions of the new tax bills, what is not in contention is the need to review the tax laws and how we administer them to serve the nation’s overall national development agenda. Presently in Nigeria, there are more than 100 different taxes on individuals and corporate bodies extorted from Nigerians by various legal and illegal entities thereby creating a toxic environment for business.

The tax bills before the National Assembly aim to streamline Nigeria’s tax administration processes, completely overhaul the nation’s tax operations, and align them with global best practices. President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023, and had only one objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive. The Oyedele-led committee is responsible for transforming revenue generation for sustainable development to achieve at least 18% Tax to GDP ratio within the next three years, that is, by 2026. Subsequently, in early October 2024, President Bola Ahmed Tinubu transmitted the Nigeria Tax Bill 2024 to the National Assembly.

The four bills are the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board Establishment Bill. The Nigeria Tax Bill seeks to eliminate multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide. The Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance and enhance the revenue for all tiers of government.

The Nigeria Revenue Service (Establishment) Bill seeks to re-establish the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect its mandate as the revenue agency for the entire federation, not just the Federal Government. The Joint Revenue Board Establishment Bill proposes creating a Joint Revenue Board to replace the Joint Tax Board, covering federal and all state tax authorities, and will also establish Tax Tribunals, and the Office of Tax Ombudsman to protect taxpayers’ interests and facilitate dispute resolution.

The advantages of these bills are obvious. The bills are expected to reshape Nigeria’s fiscal framework and establish a comprehensive legal framework governing taxation of incomes, transactions, and instruments. They will harmonise multiple taxes and levies at all levels of government and also will be responsible for the unification of revenue collection functions as well as modernisation and simplification of the tax system, including the use of technology for revenue collection.

Unfortunately, like most of what this regime does, consultation with stakeholders was inadequate. They need to know more to support the amendment. The National Executive Council (NEC), made up of the 36 Governors and headed by Kashim Shettima, the Vice President, pleaded with the President to withdraw the bill for further consultation. This agreement was announced by Seyi Makinde, the Governor of Oyo State. Even the traditional rulers of Oyo State pleaded for further consultation and information before the bills are forwarded to the National Assembly for passage to no avail. PAYE and VAT are state taxes. It’s preposterous that their advice and consent will not be sort before passing an Act that will affect their economy. Tinubu bluntly stated that any further consultations and engagement with key stakeholders to address any reservations about the bills should go on while the National Assembly considers them for passage.

This great speed to pass the bills created the impression that the government had a lot of things hidden in the bill that are targeted against certain sections of the country. They range from the sublime to the ridiculous. The first impression was that the tax regime was targeted against the North and was skewed to favour Lagos State. After a careful observation, the reverse was actually the case. The Northern Governors created the impression that the VAT regime was designed to be shared based on where the headquarters of the businesses reside. But the actual situation is that derivation formula will apply in the new bill for the collection and sharing of the VAT revenues, which meant that every state will receive the VAT revenue based on what is consumed in their states. No reasonable person can fault this arrangement. However, how can they understand if they are not informed.

The refusal of the government to consult has led to the opponents of the bills alleviating some obvious bad provisions to a level of intolerance. Section 146 of the bill, which should rank as the worst provision in the bills, seeks to raise the value added tax (VAT) from 7.5 per cent to 10 per cent by 2025, with further increases to 12.5 per cent from 2026 to 2029, and 15 per cent from 2030 onwards. How can a government which increased the price of fuel from N195 at inception to more than N1,000 now, increased electricity tariff, depreciated the naira from about N450 per a dollar to about N1,650 per a dollar, etc, be contemplating increasing taxes on Nigerians?

This is unconscionable and insensitive. This government seems poised to make 90% of Nigerians very poor before leaving office, God forbid. If this government had dialogued with all the relevant stakeholders, such provisions will not find a place in the bills. For the avoidance of doubt, any law that increases the tax of Nigerians by even one kobo now is a bad law and should be discarded by the legislature. The idea of taxing the rich and exempting the poor is not a clever excuse because if the rich can not afford the tax, they will not be able to employ the poor or pay them well if employed. If the rich becomes poorer, the poor become poorest. Every person needs reduction and relief from tax payment instead of increase in tax burden.

The tax reform bills also pride itself for exempting the poor from taxation. In pursuance to this, it stipulated that anyone earning N800,000 or below per annum will be exempted from taxation. The problem with this provision is that the minimum wage is N70,000 per month which totals about N840,000 per annum. This means that even the lowest earning worker in Nigeria is not qualified to gain anything from the exemption from paying tax. Who then can benefit from it? Consultation would have saved the executive from such little little embarrassment. When these bills were initially introduced to the National Assembly for passage what happened first was apprehension due to lack of adequate consultation and information about the bills.

This apprehension later grew into resentment when the executive resisted or rejected further consultation with relevant stakeholders before submitting to the National Assembly for approval. The resentment was so palpable that some religious fundamentalists even fabricated that some of the provisions of the tax bills are against the Sharia law. They insinuated that the bills contain provisions which will tax inherited assets by 24%. Till date nobody has pointed out such provisions. When there is information vacuum, ignorant and dubious men will fill it with fabricated lies.

This government has not learned any lessons from its past failures in consultation. President Tinubu declared that fuel subsidy was gone on the inauguration ground without consulting any human being, and went further to depreciate the naira mercilessly without a cabinet. He boasted to remove the Nigerien Military Head of State by force within seven days if he does not step down as Head of State after a successful military coup in Niger Republic, without consulting the Senate which constitutionally has the power to approve any military action outside Nigeria. He closed the border with Niger Republic for months without consulting the Governors of the seven northern states sharing border with Niger because of the coup even before exploring diplomatic means of resolving the problems, etc. Nigerians have been suffering from the consequences of such decisions till date.

This government must learn that it’s not a sign of weakness to consult with the people before presenting any bill to the legislature. Democracy is the rule of the people and the Constitution mandated the government to ensure and guarantee the participation of the people in their government. (See section 14(2)(c) of the Constitution of the Federal Republic of Nigeria as amended). It’s also good politics to carry all the political actors along while seeking approval of executive bills on the floor of the National Assembly. Shettima and the Governors must have been visibly embarrassed by the action of President Tinubu to treat their request for more consultation on the bill before legislative passage with absolute contempt. These bills contain some good provisions and deserve to be passed with desired and negotiated amendments.