Nigeria: Tax Reform Bills Set to Strengthen Nigeria’s Fiscal Stability – FRC

The Executive Chairman of the Fiscal Responsibility Commission (FRC), Mr. Victor Muruako, has emphasized that the proposed tax reform bills will enhance Nigeria’s fiscal stability by improving efficiency, transparency, and accountability in tax collection and remittance.

Speaking at a public hearing organized by the Senate Committee on Finance at the National Assembly in Abuja on Monday, Muruako stated that the objectives of the bills align with the Fiscal Responsibility Act of 2007.

“These bills will modernize tax collection, streamline revenue remittance, and enhance fiscal stability. They also align with global best practices, ensuring Nigeria’s tax system remains competitive and efficient,” he said.

Muruako noted that if enacted, the bills would diversify revenue sources, reducing Nigeria’s heavy reliance on the oil sector. Additionally, clearer tax laws would foster fiscal discipline, enhance transparency, and prevent unsustainable government spending.

He further highlighted that the reforms would boost investment, stimulate economic growth, and create jobs, thereby strengthening Nigeria’s fiscal outlook.

Key Provisions of the Tax Reform Bills

The proposed bills consolidate existing tax laws into a simplified framework, eliminating outdated regulations and minimizing conflicts in tax implementation. According to Muruako, this will create a more business-friendly environment and improve compliance.

Among the significant changes, small businesses with an annual turnover below N25 million will be exempt from corporate income tax, encouraging growth in the sector. Additionally, the corporate tax rate for companies earning above N25 million annually will be reduced from 27.5% in 2025 to 25%, easing financial pressure on businesses.

The reforms also introduce a progressive tax system, exempting low-income earners making up to N800,000 per year while imposing higher rates on higher-income groups.

“This ensures a fair and balanced tax structure that protects low-income earners while expanding the tax base,” Muruako explained.

Additionally, the proposed increase in Value-Added Tax (VAT) from 12.5% in 2026 to 15% by 2030 will exclude essential goods and exports, ensuring minimal impact on basic consumer needs.

Muruako further noted that revising the revenue-sharing formula would promote economic growth while safeguarding the interests of lower-income groups.

“If passed, these reforms will create a more efficient, transparent, and growth-driven tax system that benefits individuals, businesses, and the government. The FRC fully supports these measures and urges the legislature to approve them,” he concluded.

The Proposed Tax Reform Bills

The four tax reform bills under consideration include:

• Joint Revenue Board (Establishment) Bill (SB.583)
• Nigeria Revenue Service (Establishment) Bill, 2024 (SB.584)
• Nigeria Tax Administration Bill, 2024 (SB.585)
• Nigeria Tax Bill, 2024 (SB.586)