By Hassanat Adebowale
Mr. Victor Muruako, Executive Chairman of the Fiscal Responsibility Commission (FRC), has expressed strong support for new tax reform bills, highlighting their potential to improve fiscal stability by enhancing efficiency, transparency, and accountability in tax collection and remittance.
Speaking at a public hearing organized by the Senate Committee on Finance on Monday, Muruako emphasized that the proposed bills align with the objectives of the Fiscal Responsibility Act, 2007. He asserted that the reforms would modernize Nigeria’s tax system, bringing it in line with global best practices.
“These bills, in our view, will boost fiscal stability, streamline tax collection, and enhance transparency and accountability in revenue remittance,” Muruako said. He added that, if passed, the bills would diversify revenue sources, reduce dependence on volatile oil markets, and promote fiscal sustainability.
Muruako further explained that the proposed clearer tax laws would encourage fiscal discipline, increase transparency, and prevent unsustainable government spending. He highlighted that the reforms would stimulate investment, economic growth, and job creation, thereby strengthening the nation’s fiscal position.
The bills aim to consolidate existing tax laws into a simplified framework, reducing conflicts and complexities in implementation. Muruako noted that this reform would address issues arising from outdated and multiple tax laws, creating a more streamlined tax structure.
He also pointed out that passing the bills would help citizens and businesses understand their tax obligations, ensuring timely compliance. Small businesses with an annual turnover below N25 million would be exempt from corporate income tax, fostering their growth and creating a business-friendly environment.
Additionally, the corporate tax rate for companies with an annual turnover above N25 million would decrease from 27.5 percent in 2025 to 25 percent subsequently, easing the tax burden on Nigerian companies. The bills introduce a progressive tax system, exempting low-income earners making up to N800,000 per annum while imposing higher rates on higher earners, ensuring fair tax distribution.
Muruako also mentioned that consolidating tax laws with clear enforcement guidelines would enhance compliance and reduce bureaucracy. He emphasized that these reforms would widen the tax base and increase revenue generation.
The proposed increase in Value-Added Tax (VAT) from 12.5 percent in 2026 to 15 percent by 2030 would exclude essential commodities and exports, protecting low-income earners and promoting economic growth.
“These reforms, if passed, will create a more efficient, equitable, and growth-driven tax system, benefiting individuals, businesses, and the government. The commission fully supports these proposed reforms and urges this esteemed chamber to pass the bills into law,” Muruako concluded.
The four tax reform bills include the Joint Revenue Board (Establishment) Bill (SB.583), Nigeria Revenue Service (Establishment) Bill, 2024 (SB.584), Nigeria Tax Administration Bill, 2024 (SB.585), and Nigeria Tax Bill, 2024 (SB.586).
Tax laws are governed by various statutes, including the Companies Income Tax Act, Personal Income Tax Act, and Value Added Tax Act. The 1999 Constitution’s Section 4 grants the National Assembly the authority to legislate on tax matters for the entire country, while state assemblies handle local taxes.
The proposed tax reforms aim to simplify these laws, aligning with the Fiscal Responsibility Act (FRA) 2007, which mandates prudent public finance management and sustainable budgeting. By consolidating tax laws and introducing progressive tax measures, the bills could help achieve constitutional principles of social justice and fair contribution to national development.
If these reforms are passed, they could bring about a significant shift in Nigeria’s fiscal landscape. They have the potential to boost revenue generation, close loopholes, and create a more accountable tax administration system; an essential step toward long-term economic resilience.
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