Since the public debate around the transformative tax bills before the National Assembly began in the last few weeks, various political actors and commentators have tried to obfuscate the facts, deliberately misinforming and misleading the public.
Unfortunately, most reactions are not grounded in facts, reality, or sufficient knowledge of the bills. While some commentators have attempted to incite the people against lawmakers, others have polarized one section of the country against another.
The tax reform bills will not make Lagos or Rivers more affluent and other parts of the country, as recklessly canvassed, poorer. The bills will not destroy the economy of any section of the country. Instead, they aim to enhance the quality of life for Nigerians, especially the disadvantaged, who are trying to make a living.
Contrary to the lies being peddled, the bills do not suggest that NASENI, TETFUND, and NITDA will cease to exist in 2029 after the passage of the bills.
Government agencies, such as NASENI, TETFUND, and NITDA, are funded through budgetary provisions with company income tax and other taxes paid by the same businesses that are being overburdened with the special taxes.
One reason President Bola Tinubu embarked on the Tax and Fiscal Policy Reforms is the need to streamline tax administration in Nigeria and make the operating environment conducive for businesses.
For decades, businesses, investors, and private sector players in Nigeria have complained of being overburdened by a myriad of taxes and levies, including those earmarked to fund various government agencies and initiatives.
The multiple taxes complicate the economic environment, making Nigeria uncompetitive for investment and preventing many businesses from growing or continuing their operations. Some companies have had to make the rational decision to relocate to other countries. We can not continue on this path or wait for 20 years if this country is to deliver the prosperity we need for our people.
The proposal, as contained in section 59(3) of the Nigeria Tax Bill, only seeks to consolidate some of the earmarked taxes imposed on companies and replace them with a single tax to be shared with the key agencies as beneficiaries in a phased manner until 2030.
The time frame offers ample opportunity for the affected agencies to explore other funding sources in addition to budgetary allocations in line with the constitution and international best practices.
It is a misrepresentation of facts to conclude that changing an agency’s funding source amounts to scrapping it. None of the countries leading globally in education, science, engineering, or information technology have similar earmarked taxes.
The government imposes major taxes, be it income tax, consumption tax, or other taxes, to channel resources to its areas of priority at the time. Imposing a separate tax to fund an agency is an aberration that has yet to yield results despite the huge burden on businesses. The tax bill seeks to address this problem.
Relevant stakeholders and public analysts owe it a duty to properly educate themselves about the bills’ contents and avoid misleading the public for any reason. We may be entitled to our opinions, but such views must be informed and based on facts, not emotions targeted at inflaming passions.
In a period like this, when our people across the country look up to leaders for guidance and direction on matters of public importance, such as the Tax Reform Bills, leaders should be more measured in their public utterances to avoid heating the polity and polarising the country unduly.
President Tinubu welcomes the public interest these bills have generated. He encourages leaders across the country, including Governors, Traditional rulers, Civil Society Activists, Students, trade associations, professional associations, and the general public, to take advantage of the Public Hearings that the National Assembly will organise to present their views on how best to reform our taxes and fiscal regime.
What is never in doubt is the imperative of changing the existing tax laws and administration that have become obsolete and unhelpful in achieving the growth and development we desire for our country.
Bayo Onanuga
Special Adviser to the President
(Information & Strategy)
December 2, 2024
Read Full Details of Tax Reforms Bill Here (Part I)
Preliminary Provisions
PART I – OBJECTIVE AND JURISDICTION OF TAX AUTHORITIES
1. The objective of this Act is to provide uniform procedures for a consistent and efficient administration of tax laws in order to-
(a) facilitate tax compliance by taxpayers; and
(b) optimise tax revenue.
2. This Act applies to any person required to comply with any
provision of the tax laws whether personally or on behalf of another person. 3.-(1) The Nigeria Revenue Service (the Service), established
under the Nigeria Revenue Service (Establishment) Act, 2024 shall-
(a) have exclusive responsibility to administer taxes-
(i) on companies,
(ii) on persons employed in the Nigerian Army, the Nigerian Navy,
the Nigerian Air Force, the Nigeria Police Force, other than in a civilian capacity,
(iii) on officers of the Nigerian Foreign Service,
(iv) on non-resident persons who derive profit or income from Nigeria or any income derived from employment in Nigeria by a person, not being a resident of any State in Nigeria, and
A BILL EXECUTIVE
FOR AN ACT TO PROVIDE FOR THE ASSESSMENT, COLLECTION OF, AND ACCOUNTING FOR REVENUE ACCRUING TO THE FEDERATION, FEDERAL, STATES AND LOCAL GOVERNMENTS; PRESCRIBE THE POWERS AND
FUNCTIONS OF TAX AUTHORITIES, AND FOR RELATED MATTERS ENACTED by the National Assembly of the Federal Republic of Nigeria –
Commencement
Objective of the Act
Application
Jurisdiction of tax authorities
C 4660
Nigeria Tax Administration Bill, 2024 2024
1 (v) contained in chapter two, parts III, X, XI; chapters three, six, and 2 seven and chapter eight, parts II and IV of the Nigeria Tax Act;
3 (b) have power to administer taxes contained in chapters two, three, 4 five, six, seven, and eight of the Nigeria Tax Act; and
5 (c) exercise such other powers and functions conferred on it by this 6 Act, the Nigeria Revenue Service (Establishment) Act, and any other law as 7 may be enacted by the National Assembly.
8 (2) The relevant tax authority in a State or the Federal Capital 9 Territory, shall pursuant to the First schedule to this Act, be responsible for-
10 (a) the administration of taxes contained in chapters two, parts I, II, 11 IV-IX; chapter five; and chapter eight, parts I and III of the Nigeria Tax Act on 12 individual resident in such state or the Federal Capital Territory, subject to 13 subsection 1(a) (ii) – (iv) of this section; and
14 (b) exercising such other powers and functions conferred on it under 15 any tax law enacted by the National Assembly.
16 (3) A tax authority, with the approval of the relevant government, may 17 authorise another tax authority to administer taxes within its jurisdiction on its 18 behalf, on such terms as they may agree.
19 (4) For the purpose of subsections (1) and (2) of this section, the 20 relevant tax authority may do such things as it deems necessary and expedient 21 for the assessment and collection of taxes and shall account for all taxes so 22 collected in accordance with the provisions of this Act, the Nigeria Tax Act and 23 any other law enacted by the National Assembly or a State House of Assembly. 24 PART II – REGISTRATION
25 4. A taxable person shall register with the relevant tax authority and 26 obtain a Taxpayer Identification (“Tax ID”) for the purpose of compliance with 27 tax obligations.
28 5. Every ministry, department or agency of the Federal or a State 29 government, and every Local Government shall register for tax and obtain a 30 TaxID.
Taxable person
Federal, state and Local Government
Nigeria Tax Administration Bill, 2024
6.-(1) A non-resident person that supplies taxable goods or services to any person in Nigeria, or derives income from Nigeria shall register for tax purposes and obtain a Tax ID, provided that a non-resident person who derives only passive income from investment in Nigeria may not be required to register for tax but shall provide relevant information as may be prescribed by the Service.
(2) The relevant tax authority may issue guidelines for the purpose of giving effect to the provisions of this section.
7.-(1) The relevant tax authority shall, upon receiving a request, register and issue a Tax ID to every taxable person.
(2) Where a relevant tax authority refuses to register or issue a Tax ID upon request under subsection (1) if this section, the relevant tax authority shall, within two working days of the decision, notify that person of the refusal.
(3) A relevant tax authority may, based on the information available to it, register and issue a Tax ID to a person who should apply for a Tax ID but failed to do so.
(4) The relevant tax authority shall promptly notify a person registered and issued with a Tax ID under subsection (3) of this section of the registration and Tax ID.
(5) A taxable person having a valid Tax ID shall not apply for, or be issued with another Tax ID.
(6) A person who discovers that a taxable person has multiple Tax IDs, shall promptly report to the relevant tax authority for unification.
(7) A Tax ID issued to one taxable person is not transferable or usable by another taxable person.
8.-(1) A Tax ID shall be-
(a) stated on a return, notice, correspondence or documents submitted, lodged, or used for the purposes of tax compliance;
(b) stated on a document prepared, produced, issued or submitted
C 4661
Non-resident person
Issuance of taxpayer identification
Use of taxpayer identification
Nigeria Tax Administration Bill, 2024 2024
1 in respect of a transaction; and
2 (c) a condition for entering into a contract with any federal or state 3 ministry, department or agency and local government.
4 (2) A person engaged in banking, insurance, stock-broking, or other 5 financial services in Nigeria shall make the provision of a Tax ID, a 6 precondition for opening a new account or operating an existing account.
Notification of change in particulars
9. -(1) Every taxable person shall, within 30 days of the occurrence of in its particulars, notify the relevant tax authority of the change.
(2) The change referred to in subsection (1) of this section includes- (a) name, including trading name, location of business, telephone or e-mail address, and registered address;
Suspension, deregistration
and cancellation
of tax identification
7
8 a change
9
10
11 numbers
12
13
14 capital, or the beneficial owner of the shares held by nominees,
15 (ii) a trust, the full identity, address and other contact details of the 16 trustees and beneficiaries of the trust,
17 (iii) a partnership, the full identity, address and other contact details of 18 all the partners, or
19 (iv) sale, liquidation or merger of a business, all relevant information 20 regarding the sale, liquidation or merger, and full details of the new owners.
21 10.-(1) Where a taxable person temporarily ceases to carry on a trade 22 or business in Nigeria, the taxable person shall notify the relevant tax authority 23 of its intention to suspend its registration for tax purposes within 30 days of 24 such temporary cessation of trade or business.
25 (2) The relevant tax authority shall classify the Tax ID as dormant and 26 place it on suspension.
27 (3) Where a taxable person permanently ceases to carry on a trade or 28 business in Nigeria, the taxable person shall notify the relevant tax authority of 29 its intention to deregister for tax purposes within 30 days of such cessation of 30 trade or business.
(b) in the case of-
(i) an incorporated person, persons holding 5% or more of its share
2024
Nigeria Tax Administration Bill, 2024
(4) Where a taxable person permanently ceases to carry on a trade or business, the relevant tax authority shall deregister the Tax ID.
(5) The relevant tax authority shall deregister or cancel a Tax ID where it is satisfied that-
(a) the taxable person is deceased, or, in the case of a body corporate, including a government ministry, department or agency is wound up or dissolved; and
(b) the person to whom the Tax ID was issued has another one.
(6) A taxable person whose Tax ID has been suspended, shall, upon reapplication, be re-issued with the same Tax ID.
CHAPTER TWO
RETURNS, ASSESSMENTS AND PAYMENTS PART I – RETURNS
11.-(1) Every company, including a company granted exemption from incorporation, whether or not it is liable to pay tax under the Nigeria Tax Act or any other tax law, for a year of assessment, with or without notice from the Service, shall file a self-assessment return with the Service in the prescribed form at least once a year and such return shall contain-
(a) a duly completed self-assessment form as may be prescribed by the Service;
(b) the audited financial statements, tax and capital allowances computation for the year of assessment in respect of the profit from each and every source computed,
provided that the return of a small company may contain a statement of accounts attested to by the taxpayer in place of audited financial statements;
(c) evidence of payment of the tax due;
(d) computation of the effective tax rate and additional tax payable, where applicable; and
(e) an attestation of the information contained in the tax returns signed by a Principal Officer of the company.
C 4663
Income tax returns for companies
C 4664
Nigeria Tax Administration Bill, 2024 2024
(2) Where a non-resident company derives profit from or is taxable in Nigeria under chapter two of the Nigeria Tax Act, such company shall be required to submit a return for the relevant year of assessment containing-
(a) the company’s full audited financial statements and the financial statement of the Nigerian operations, attested to by an independent, qualified or certified accountant in Nigeria;
(b) tax computation schedules based on the profits attributable to its Nigerian operations;
(c) a true and correct statement, in writing, containing the profits from each and every source in Nigeria;
(d) duly completed Income Tax Self-Assessment Forms;
(e) evidence of payment of the tax due; and
(f) a computation of the effective tax rate and additional tax payable,
where applicable.
(3) The provisions of subsection (2) of this section shall not apply in a
year of assessment where a non-resident company only earns income on which the amount deducted at source is the final tax under the Nigeria Tax Act.
(4) Where a company permanently ceases operation in Nigeria, the company shall file the returns for the year of cessation and any outstanding return.
(5) Subject to this Act, any tax law or regulation, the time of filing returns shall be-
(a) in the case of a company that has been in business for more than 18 months, not more than six months after the end of its accounting year;
(b) in the case of a newly incorporated company, within 18 months from the date of its incorporation or not later than six months after the end of its first accounting period, whichever is earlier; or
(c) in the case of a company that permanently ceases to carry on trade or business in Nigeria, not later than six months from the date the company permanently ceases to carry on the trade or business in Nigeria.
Nigeria Tax Administration Bill, 2024
(6) For the purpose of this section-
(a) every company shall designate a representative or representatives who shall attend to its tax matters; and
(b) where a person designated by a company pursuant to paragraph (a) of this subsection is a paid agent, such person shall be a person accredited under Section 32 of this Act.
12.-(1) Not later than two months after the commencement of each accounting period of any midstream company engaged in liquefied natural gas, the company shall submit to the Service an estimated returns of its profits or losses for that accounting period for the purpose of income tax.
(2) The estimated tax returns shall contain-
(a) a computation of its estimated revenue, adjusted profit or loss and estimated assessable profits of that period;
(b) a computation of its estimated revenue from all sources including plants condensates, natural gas liquids, liquefied natural gas, liquefied petroleum gas and any other incidental income;
(c) a statement of an estimate of amounts to be repaid, refunded, waived or released to it, referred to in section 68 (2) of the Nigeria Tax Act, during that period;
(d) in connection with part I of the First Schedule to the Nigeria Tax Act, a schedule showing-
(i) the estimated residues at the end of that period in respect of its assets, all estimated qualifying capital expenditure incurred by it in that period,
(ii) the values of its assets, estimated by references to the provisions of that schedule, to be disposed of in that period,
(iii) the allowances due to it under that schedule for that period, and
(iv) a computation of estimated capital allowances for the period; (e) a computation of its estimated total profits of that period;
(f) a computation of its estimated tax payable for that period; and
C 4665
Estimated income tax returns for companies engaged in liquefied natural gas
C 4666
Nigeria Tax Administration Bill, 2024 2024
1 (g) a declaration, that the estimate was made to the best of the ability 2 of the person signing the declaration.
3 (3) Where, at any time during the accounting period, there is a 4 material change in any of the parameters, the company shall submit a revised 5 return to reflect the change for such period.
6 (4) Every return made by a company engaged in liquefied natural gas 7 operations in fulfilment of the provisions of this section shall be subject to 8 review and validation by the Service.
9 (5) Where a company does not provide the estimates required under 10 subsection (1), (2) and (3), of this section, the Service may determine the 11 estimates payable by the company on the best of judgement basis.
12 13.-(1) A return of income shall be filed, in the prescribed form, with 13 the relevant tax authority in each year of assessment and without notice or 14 demand, by-
15 (a) every taxable person whether or not liable to pay tax; and
16 (b) non-resident persons liable to pay tax in Nigeria under chapter two 17 of the Nigeria Tax Act.
18 (2) The return required to be filed under this section shall contain-
19 (a) a duly completed self-assessment form;
20 (b) the amount of income from every source for the year preceding the 21 year of assessment computed in accordance with the provisions of the Nigeria 22 Tax Act or any regulation made pursuant to the Act;
23 (c) personal relief and tax computation;
24 (d) in the case of income earned from trade, business, profession or 25 vocation, an audited financial statement or a statement of accounts attested to 26 by the taxpayer; and
27 (e) evidence of payment of the tax due.
28 14.-(1) An employer shall file a return with the relevant tax authority 29 for all emoluments paid to its employees, not later than 31 January of each year 30 in respect of all employees in its employment in the preceding year.
Income tax returns for individuals
Pay As You Earn
Nigeria Tax Administration Bill, 2024
(2) The returns shall disclose for each employee gross emoluments, including allowances and benefits in kind, total deductions, net emoluments and tax deducted.
(3) Notwithstanding the provisions of subsection (1) of this section, an employee shall file an annual return of income from all sources, including employment income, in accordance with section 13 of this Act.
15. Notwithstanding the provisions of section 14, a relevant tax authority may issue guidelines for the filing of a simplified income tax return by low-income earners or persons operating in the informal sector.
16.-(1) Not later than two months after the commencement of each accounting period of any company engaged in petroleum operations, the company shall submit to the Service an estimated returns of its profits or losses for that accounting period for the purpose of hydrocarbon tax, petroleum profit tax and Income tax, as applicable.
(2) Any company involved in upstream petroleum operations under parts I or II of chapter three of the Nigeria Tax Act, shall apply the accounting periods under parts I and II of chapter three of the Nigeria Tax Act respectively.
(3) The estimated tax returns shall in addition to the particulars requested for the purpose of determining estimated tax payable under parts I and II of chapter three of the Nigeria Tax Act, contain-
(a) a computation of its estimated revenue, adjusted profit or loss and estimated assessable profits of that period;
(b) a computation of its estimated revenue from all sources including crude oil, field condensates and liquid natural gas liquids derived from associated and non-associated gas produced upstream of the measurement points;
(c) a statement of an estimate of amounts to be repaid, refunded, waived or released to it, referred to in sections 68 (2) and 91(2) of the Nigeria Tax Act during that period;
C 4667
Simplified Annual Income Tax Return
Estimated returns
for upstream petroleum operations
C 4668
Nigeria Tax Administration Bill, 2024 2024
(d) in connection with parts II and III of the First Schedule to the Nigeria Tax Act a schedule showing-
(i) the estimated residues at the end of that period in respect of its assets,
(ii) all estimated qualifying petroleum expenditure incurred by it in that period,
(iii) the values of its assets, estimated by references to the provisions of that schedule, to be disposed of in that period, and
(iv) the allowances due to it under that schedule for that period;
(e) in connection with the Sixth Schedule of the Nigeria Tax Act a schedule showing estimated total production allowance and cost price ratio limits from all its upstream petroleum operations related to crude oil on the two classes of the chargeable profits;
(f) a computation of its estimated chargeable profits of that period identified in accordance with the Nigeria Tax Act;
(g) a computation of its estimated tax payable for that period; and
(h) a declaration, that the estimate was made to the best of the ability of the person signing the declaration.
(4) Where, at any time during the accounting period, there is a change in price, cost or volume, the company shall submit further returns on a monthly basis containing its revised estimated tax for such period.
