Senate Passes Landmark Tax Reform Bills

In a significant move toward revamping Nigeria’s fiscal framework, the Senate has passed four major tax reform bills aimed at improving revenue generation and reducing dependence on oil income.

The bills—the Nigeria Tax Bill 2024, the Nigeria Tax Administration (Procedure) Bill 2024, the Nigeria Revenue Service (Establishment) Bill 2024, and the Joint Tax Board (Establishment) Bill 2024—form part of a broader strategy to create a more equitable, transparent, and efficient tax system.

A key component of the reforms is a new Value Added Tax (VAT) sharing formula. Under the proposed structure, 50% of VAT revenue will be distributed equally among all states, 20% based on population, and 30% according to consumption levels. The VAT rate remains unchanged at 7.5%, easing concerns about potential increases in the cost of goods and services.

The bills also ensure continued funding for critical development agencies such as the Tertiary Education Trust Fund, the National Agency for Science and Engineering Infrastructure, and the National Information Technology Development Agency.

Another highlight is the transformation of the Federal Inland Revenue Service into the Nigeria Revenue Service. This restructuring aims to enhance tax collection, strengthen local government revenue, and support state-level fiscal autonomy.

Executive Chairman of the FIRS, Dr. Zacch Adedeji, has been at the forefront of these reforms, spearheading efforts to modernise the tax system and expand the country’s revenue base.

With Senate approval secured, the harmonisation process between the Senate and the House of Representatives will follow. Once aligned, the bills will be sent to President Bola Tinubu for assent. Upon signing, the laws will be published in the official gazette and take effect nationwide.

These reforms mark Nigeria’s most comprehensive tax overhaul in recent years and are expected to lay the groundwork for sustainable development and renewed public trust in the nation’s economic management.