Nigeria’s Tax Reforms Set To Commence In July, Says Oyedele

The Nigerian government is gearing up to roll out significant tax reforms by July, aimed at simplifying and centralizing the country’s complex tax system. According to Taiwo Oyedele, Chair of the Presidential Fiscal Policy and Tax Reforms Committee, these changes are designed to transform the nation’s fiscal landscape.

Tax Reforms Timeline and Implementation

Speaking at The Platform, a notable event in Lagos, Oyedele revealed that legislation for these reforms is expected to be finalized by the end of the first quarter of 2025. This will allow sufficient notice for taxpayers to prepare for implementation starting from July 1.

“We anticipate the tax reforms will be approved, particularly the tax reform bills, by the end of Q1. This will enable taxpayers to build capacity and prepare for implementation by July,” Oyedele stated.

Key Objectives of the Reforms

The upcoming reforms aim to simplify tax collection by consolidating over 60 separate taxes and levies into just six, reducing the burden on taxpayers and improving efficiency.

The reforms also include provisions to harmonize Nigeria’s tax system, minimize multiple taxation, and offer exemptions for low-income earners. These measures are expected to ease the strain on businesses, ensure fairness, and stimulate economic growth.

Challenges and Stakeholder Reactions

While these reforms are widely regarded as transformational, they have sparked debates among stakeholders. Some Northern leaders have called for their withdrawal, citing concerns about implementation and fairness. However, other stakeholders have emphasized the need for wider consultations to address these issues.

“These reforms are truly transformational. They excite me because of the possibilities they hold for Nigeria. Structurally, they will ease pressure on the policy authorities and create lasting solutions,” Oyedele said.

Nigeria’s Tax-to-GDP Ratio and Revenue Goals

Currently, Nigeria’s tax-to-GDP ratio stands at a mere 10.8%, one of the lowest in the world, despite its population of over 200 million people. The Presidential Fiscal Policy and Tax Reforms Committee, inaugurated by President Bola Tinubu, aims to increase this ratio to 18% by 2026.

The committee’s core mandate includes transforming revenue generation to ensure sustainable development, addressing multiple taxation issues, and boosting economic stability.

Addressing Dollar-Based Tax Payments

Oyedele also highlighted how current tax practices contribute to instability in the forex market. Nigerian businesses are required to pay over $3.5 billion in taxes annually in U.S. dollars, which exacerbates demand for foreign exchange and weakens the naira.

“One of the key provisions of these reforms is to eliminate the need for businesses to source dollars for tax payments. This will stabilize the naira and incentivize business growth,” he explained.

The reforms aim to address such distortions by ensuring a more stable currency and creating an enabling environment for businesses to thrive.

A Step Toward Sustainable Growth

As Africa’s largest economy, Nigeria stands at the threshold of a fiscal transformation. These tax reforms are expected to not only boost government revenue but also create a more business-friendly environment, reduce the tax burden, and drive sustainable development across the nation.