Nigeria's Parliament Approves Major Tax Reforms Amid Mixed Reactions

Nigeria's parliament passed tax reform bills, aiming to improve revenue collection and streamline tax laws. However, key proposals like VAT increase and revenue allocation were modified. The bills include new corporate tax rates and global minimum tax for multinationals. Final approval awaits President Tinubu's assent.

Nigeria's lower house of parliament has given the green light to a series of tax reform bills proposed by President Bola Tinubu, signaling a significant push towards restructuring the nation's tax mechanisms. Despite the progressive stride, several of Tinubu's original proposals were diluted during the legislative process.

With Nigeria battling one of the lowest tax-to-GDP ratios globally at 10.8%, Tinubu's reforms aim to modernize the system by raising VAT to 12.5% by 2026 and improving revenue distribution between federal and state levels. Yet, lawmakers maintained the VAT at 7.5% and chose to exclude minimum wage earners from income tax to alleviate the burden on the low-income population.

The reformed bills replace the existing petroleum profit tax with a 30% corporate tax on oil industry gains, introducing a global minimum tax for giants with turnovers above $970.80 million. These adjustments await further passage in the upper house, with implementation pending Tinubu's endorsement.

(With inputs from agencies.)