JUST IN: House of Reps okays Tinubu’s tax reform bills, retains VAT at 7.5%

The House of Representatives has approved the report from the Committee on Finance regarding the tax reform bills.

During Thursday’s plenary, James Falake, chairman of the finance committee, moved a motion for a clause-by-clause consideration of the bills, and the committee’s recommendations were subsequently adopted.

The tax reform bills, which include the Nigeria Tax Bill, the Tax Administration Bill, the Joint Revenue Board Establishment Bill, and the Nigeria Revenue Service Bill, were presented to the National Assembly after President Bola Tinubu urged their passage on October 3, 2024.

The bills initially faced opposition from northern governors, who raised concerns about their potential impact on the region’s interests and called for fair and equitable implementation across all regions.

However, in January 2025, the Nigeria Governors’ Forum (NGF) endorsed the bills after agreeing on an equitable VAT-sharing formula.

In November 2024, the Senate passed the bills for second reading, and the bills passed the second reading in the House of Representatives in February 2025 after a thorough debate. Following this, a public hearing was held.

Section 146 of the Nigeria Tax Bill initially proposed a gradual VAT increase from 7.5 percent to 12.5 percent in 2026, 2027, 2028, and 2029, with a final increase to 15 percent by 2030. This proposal faced strong criticism and was rejected by stakeholders, including the Trade Union Congress (TUC), during the public hearing.

As a result, the committee reviewed the proposal and recommended that VAT remain at the current rate of 7.5 percent, which was approved by the House.

Regarding VAT revenue distribution, the Nigeria Tax Bill originally proposed allocating 15 percent to the federal government, 50 percent to states and the Federal Capital Territory (FCT), and 35 percent to local governments.

However, the committee recommended a revised distribution, with 10 percent going to the federal government, 55 percent to state governments and the FCT, and 35 percent to local governments. This new distribution was also approved by the House.