NEITI supports tax reform bills, calls for clarity on implementation

The agency has also called on the Presidential Committee on Fiscal Policy and Tax Reforms to provide a clear and detailed outline of its strategy to harmonize federal and state tax laws.

This position was articulated yesterday in a statement released by Obiageli Onuorah, the Acting Director of Communications and Stakeholders Management.

The proposed tax reform bills have been submitted to the National Assembly for consideration.

NEITI is seeking clarification on the roles of subnational governments in implementing the bills and identifying areas where policy improvements are needed.

In alignment with the Nigeria Governors’ Forum, NEITI has endorsed the tax reform bills currently under discussion in the National Assembly.

NEITI outlined its position in a memo addressed to the leadership of the National Assembly and the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms and signed by its Executive Secretary, Orji Orji.

Dr. Orji noted that the bill has the potential to modernize Nigeria’s tax system, streamline its administration, and expand the tax base to align with global best practices.

The draft tax bill emphasizes consolidating legal frameworks, taxing digital assets, addressing taxation for residents and non-residents, and introducing measures to combat tax evasion while demonstrating a strong commitment to fiscal transparency and efficiency. NEITI believes that a thorough review of the bill indicates its potential to positively impact revenue generation, household livelihoods, job creation, and overall economic opportunities.

According to NEITI, while Sections 1 and 2 aim to establish unified tax legislation across Nigeria for all individuals and legal entities, they lack explicit guidelines for harmonizing federal and state tax laws and clarifying the roles of subnational governments.

The agency highlighted the public interest in the bill, noting that the debate surrounding it underscores the need for greater clarity and trust in its provisions once enacted.

Despite the bill’s potential, NEITI’s review identified both strengths and weaknesses, particularly concerning the extractive industries, which fall within NEITI’s mandate. The agency made several recommendations to address these gaps.

NEITI commended the bill’s intent to unify tax administration by repealing existing acts and consolidating them into a single framework, emphasizing the importance of careful management during the transition process and robust public awareness campaigns to prevent administrative confusion.

Regarding the implications for the oil, gas, and mining industries, NEITI recommended introducing clauses to align with state tax systems and provide guidance for resolving jurisdictional conflicts.

The agency noted that the provisions related to taxing digital assets align with global practices and called for clear definitions of taxable assets, events, and valuation guidelines to ensure effective reporting and implementation.

On employee taxation and benefits in kind, NEITI requested the establishment of explicit guidelines for valuing perks like accommodation to minimize disputes. The agency also pointed out the exclusion of partnerships and joint ventures in petroleum operations, which presents a significant gap that needs addressing for fairness and accountability in the sector.

Regarding petroleum operations, NEITI called for a reduction in hydrocarbon tax rates for smaller operators to encourage participation and suggested expanding incentives for carbon capture and renewable energy development projects to align with energy transition goals.

While NEITI found the provisions on Stamp Duties and Value Added Tax comprehensive, it expressed concerns about enforcement in the informal sector and compliance burdens on SMEs. The agency emphasized that successful relief efforts for double taxation would depend on robust international agreements and institutional capacity.

NEITI recommended reassessing tax rates for small-scale service providers and simplifying compliance processes for Excise Duty on Services. It also called for implementing effective digital tax administration tools to monitor VAT compliance and prevent evasion.

The agency urged the National Assembly to expand tax exemptions to include renewable energy and sustainability projects, highlighting that current emphasis on these areas is limited.

Other recommendations included streamlining application procedures for Economic Development Tax Incentives, defining eligible sectors for exemptions from Stamp Duties and VAT, and lowering stamp duty rates for priority sectors to encourage investment.

In terms of general provisions, NEITI recommended investing in capacity-building for tax administrators and adopting data-driven monitoring systems. It also suggested establishing a clear dispute resolution mechanism, possibly through tax tribunals, to address double taxation issues and called for reduced rates or exemptions for priority sectors to foster investment.

NEITI emphasized the importance of engaging with key stakeholders, particularly civil society, and offered to lead discussions on the reform bill, leveraging its experience in relationship management and confidence-building.

On resident and non-resident taxation, NEITI acknowledged the provision for significant economic presence but stressed the need for clear criteria to avoid disputes. While the minimum effective tax rates for foreign subsidiaries are intended to curb profit shifting, NEITI highlighted the necessity of collaboration with international tax authorities for successful implementation.

Finally, NEITI supported the provisions on taxing undistributed profits but advised that small and medium enterprises should be considered to avoid disproportionate impacts. The agency recommended exemptions for small businesses or startups to encourage reinvestment and growth while suggesting explicit thresholds for significant economic presence to simplify enforcement and compliance for non-resident taxation.