Nigeria: CITN Supports Tax Reforms, Urges Federal Government to Rethink Derivation Principle

The Chartered Institute of Taxation of Nigeria (CITN) has expressed strong support for the Federal Government’s proposed tax reform bills, urging policymakers to reconsider the inclusion of the derivation principle to ensure the reforms achieve their desired objectives.

CITN President Mr. Samuel Agbeluyi shared this perspective during a media workshop for finance journalists in Lagos, emphasizing that the derivation principle could hinder the reform process. He stated, “If the derivation principle would pose a problem, then it can be dropped, as we cannot throw away the baby with the bathwater.”

Government’s Commitment to Tax Reforms

Agbeluyi commended the government’s commitment to transforming Nigeria’s tax system, reducing its dependence on oil revenues, and fostering fiscal stability. He encouraged stakeholders to rely on accurate data and verifiable facts when assessing the reforms.

Highlighting key government initiatives, he noted:

1. Executive Orders and Tax Relief Measures:
   • In July 2023, President Bola Tinubu signed four executive orders introducing significant tax reliefs, including the suspension of the 5% excise tax on telecommunications services.
2. Presidential Fiscal Policy and Tax Reforms Committee:
   • Established in August 2023, this committee addresses critical challenges in fiscal governance, revenue generation, and economic growth.
3. Fiscal Incentives for the Gas Sector:
   • A December 2023 circular introduced import duty waivers and zero-rated VAT for key components and services in the gas sector.
4. Deduction at Source (Withholding Tax) Regulations 2024:
   • In June 2024, the Minister of Finance issued new regulations clarifying withholding tax deductions across various tax regimes.

Advancements in Tax Compliance

Agbeluyi also praised improvements to the TaxProMax system and the introduction of a Tax Wallet feature, which aim to simplify tax compliance and enhance flexibility for businesses. He stated, “The importance of taxation in Nigeria’s economic development cannot be overemphasized.”

CITN’s Call for Strategic Execution

The Institute lauded the government’s efforts to address systemic challenges in the tax system but urged a strategic and inclusive approach to execution. Agbeluyi concluded, “We welcome these reforms and look forward to a tax system that is transparent, efficient, and supportive of economic growth.”

By reevaluating aspects like the derivation principle, the Federal Government can foster a more unified and effective tax regime that aligns with Nigeria’s broader economic development goals.