NEITI: Tax reform bill’ll modernise Nigeria’s tax system

The Nigeria Extractive Industries Transparency Initiative (NEITI) has endorsed the tax reform bill currently being debated at the National Assembly, saying it has the potential to modernise Nigeria’s tax system.

NEIT said this in a memo issued by its Executive Secretary, Dr Orji Ogbonnaya.

Orji, in the memo addressed to the leadership of the National Assembly and the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms which is leading the reform process, identified areas needed to improve the policy gaps in the Bill.

According to him, NEITI’s observations followed a detailed review of the draft legislation, which showed extensive research and consultation to produce the innovative provisions that are being deliberated upon.

A statement issued by the Acting Director of Communications and Stakeholders Management of NEITI, Obiageli Onuorah, on Tuesday, January 21, 2025, quoted Orji as noting that the draft tax bill emphasised consolidation of legal frameworks, taxing digital assets, addressing resident and non-resident taxation, and introducing measures to curb tax evasion while demonstrating a strong commitment to fiscal transparency and efficiency.

He said: “A detailed review of the bill revealed that it has the potential to impact positively on revenue generation, household livelihoods, job creation, and overall economic opportunities.

“The public debate generated by the bill underscored the overwhelming public interest by Nigerians and the need for greater clarity and trust in its provisions after it is finally passed into law.”

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Despite the potential of the bill, NEITI said its section-by-section review of the draft law revealed its strengths and weaknesses, particularly as they affect the extractive industries, which was the core of NEITI’s specific mandate and thus made several recommendations to bridge the gaps in the implementation of the proposed law.

“Sections 1 and 2 aim to ensure unified tax legislation across guidelines to harmonize federal and state tax laws and clarify roles of subnational governments,” it stated.

Commending the intent of the bill on unifying tax administration in the country, by repealing existing acts and consolidating them into a single framework, NEITI noted that “careful management of the transition process and robust public awareness campaigns were critical to avoid administrative confusion.”

On implications of the tax law for the oil, gas and mining industries, including income, petroleum operations, VAT, and tax incentives, NEITI recommended the introduction of clauses to address issues of alignment with state tax systems and provide guidance for resolving jurisdictional conflicts.

NEITI, however, urged the National Assembly to expand exemptions under the tax incentives to include renewable energy and other sustainability projects, noting that placing emphasis on sustainability and environmental initiatives was limited and weak.

It also called for robust engagements with critical stakeholders, especially the civil society.

The Star