Tax Reform: A Game-Changer for Nigeria’s Revenue Generation?

The President of the Chartered Institute of Taxation of Nigeria (CITN) asserts that the tax reform initiated by the Federal Government is poised to greatly enhance Nigeria’s revenue generation capabilities. This perspective is supported by specialists who contend that the existing tax framework in Nigeria is overly complicated, hindering economic growth and failing to produce adequate revenue for developmental purposes.

The objective of the tax reform is to restructure the system to improve its efficiency, effectiveness, and fairness.

 A Transformative Phase for Nigeria

The anticipated tax reform legislation is poised to deliver a multitude of advantages for Nigeria, primarily by enhancing and streamlining tax administration without imposing increased tax rates on the populace. As stated by the president of the CITN, these reforms are set to bolster national revenue while introducing greater efficiency and organization to tax management.

Key advantages of the proposed tax reform legislation include:

·         Streamlined Tax Framework: The legislation seeks to consolidate various tax laws into a cohesive and simplified structure, facilitating compliance for both individuals and businesses.

·         Lesser Tax Obligations: The reforms advocate for a progressive personal income tax system that exempts low-income earners from taxation and alleviates the tax responsibilities of small enterprises.

·         Enhanced Revenue Generation: The proposed measures aim to refine tax administration, curtail evasion, and boost revenue collection.

·         Fostering Economic Development: The reforms are designed to cultivate a business-friendly atmosphere that promotes entrepreneurship and attracts investment.

·         Equitable Revenue Distribution: The legislation introduces a revised revenue allocation formula, granting states a larger portion of VAT revenue, thereby advancing fiscal federalism.

Additionally, the tax reform legislation offers substantial benefits to individuals, corporations, and state governments. For example, it proposes a reduction in the

 income tax rate from 30% to 25% over the next two years, while replacing designated taxes on companies with a more streamlined single levy.

In summary, the tax reform legislation signifies a pivotal transition towards a more efficient, effective, and just tax system in Nigeria.

The CITN council meeting

The CITN Council Meeting held in Jos represented a pivotal occasion for members to convene and deliberate on pressing matters concerning Nigeria’s tax framework. This gathering served as a forum for stakeholders to examine approaches aimed at enhancing tax compliance, broadening the tax base, and rectifying deficiencies within the existing system.

During the proceedings, the president of CITN reaffirmed the institute’s dedication to partnering with the government and other relevant parties to facilitate the effective execution of tax reforms. This collaboration is particularly vital as the Nigerian government aims to boost internally generated revenue (IGR) and diminish reliance on oil exports.

Taxation reforms have emerged as an essential mechanism for fostering economic stability and growth. Stakeholders, including CITN, persist in their advocacy for a more transparent and fair tax system that supports national development. Notably, the Senate conducted a two-day public hearing in February regarding proposed tax reform bills, which gathered significant participants from the economic and financial sectors to discuss and influence critical fiscal policies.

Key focal points of the CITN Council Meeting included:

·         Enhancing Tax Compliance: Initiatives aimed at improving compliance and curbing evasion.

·         Broadening the Tax Base: Strategies to expand the tax base and augment revenue collection.

·         Rectifying Loopholes: Efforts to identify and amend gaps in the current tax structure.

The tax reform bills currently under consideration present significant potential for enhancing Nigeria’s economic stability and growth. By establishing a more transparent and equitable tax framework, the government can boost internally generated revenue, lessen reliance on crude oil, and promote national development.

As the Nigerian government actively explores avenues to enhance the tax system, the Chartered Institute of Taxation of Nigeria (CITN) is dedicated to working alongside stakeholders to facilitate the effective implementation of these reforms. With the backing of essential stakeholders, Nigeria can develop a tax system that encourages economic growth, mitigates inequality, and cultivates a more prosperous future for all its citizens.