Nigeria’s New Tax Laws Spark Controversy Over Alleged Tampering
Nigeria’s newly implemented tax laws are mired in controversy amid allegations that the published versions differ significantly from the legislation passed by parliament, raising questions over their validity and intent.
According to African Business, discrepancies surfaced after Abdulsamad Dasuki, an opposition lawmaker, claimed that sections of the gazetted laws contained unauthorized changes, potentially undermining President Bola Tinubu’s ambitious tax reforms. Key concerns include lower tax thresholds, broadened enforcement powers, and reduced legislative oversight.
What’s in the Tax Laws?
The reforms, which took effect on January 1, include four key laws: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act. Among the changes is the establishment of the National Revenue Service (NRS) to replace the Federal Inland Revenue Service, aimed at streamlining tax collection and administration.
Provisions such as exempting individuals earning less than 800,000 naira ($565) annually from income tax and lowering the corporate tax rate for medium-sized businesses to 25% from 30% signal efforts to reduce the tax burden on lower income earners. Similarly, capital gains tax now incorporates progressive rates linked to personal income thresholds, moving away from a previous flat 5% rate.
However, lawmakers and analysts have raised red flags over seemingly unauthorized amendments discovered in the gazetted laws. For instance, the income threshold for maximum personal income tax was halved from 50 million to 25 million naira, while corporate thresholds dropped from 250 million to 50 million naira. Additionally, taxpayers are now required to deposit 20% of assessed taxes before being allowed to appeal disputes—a provision not included in the original draft.
Implications for Taxpayers and Policy Enforcement
Tax enforcement measures also include contentious provisions. The published versions bypass the need for court orders before asset seizures and mandate payment of petroleum taxes in U.S. dollars—a deviation from earlier stipulations that accommodated multiple currencies. Industry players, including fund managers, are also navigating a new 10% withholding tax imposed on interest from short-term financial instruments, sparing only government bonds.
Critics argue that these discrepancies undermine legal stability and invite distrust among taxpayers. International consultancy firm KPMG identified 31 errors, omissions, and inconsistencies in the tax laws, urging an immediate review. At the same time, opposition leaders have demanded an investigation and, in some cases, labeled the discrepancies “treasonous.”
Future Prospects: Reform at Risk?
While President Tinubu’s administration downplays the allegations, insisting that they do not warrant halting the reforms, the National Assembly is taking action. Certified true copies of the laws have been published as part of a verification process, and lawmakers have launched an investigation to identify those responsible for unauthorized changes.
For Nigeria, the stakes are high. If resolved thoughtfully, the reforms could modernize the tax system and generate much-needed revenue. However, unresolved controversies and allegations of tampering could hinder implementation, adding economic and political uncertainty. As observers wait for outcomes, a critical question emerges: Can the government restore trust in this ambitious overhaul?
Original source: African Business.
