The Senate on Wednesday passed two out of the four proposed tax reform bills submitted by President Bola Tinubu, marking a significant step toward overhauling Nigeria’s fiscal framework.
The bills passed are the Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board (Establishment) Bill.
Their passage followed the adoption of the report of the Senate Committee on Finance, presented by its Chairman, Senator Musa Mohammed Sani (APC, Niger East), during plenary presided over by Senate President Godswill Akpabio.
Akpabio announced that the Senate would constitute a harmonisation committee to reconcile differences between its version and that earlier passed by the House of Representatives in March. Once harmonised, the unified bills will be transmitted to the President for assent.
He also assured that the remaining two bills — the Nigeria Tax Bill 2024 and the Tax Administration Bill — would be considered and passed on Thursday.
Meanwhile, the Senate rejected a proposal to increase the Value-Added Tax (VAT) rate from 7.5 percent to 10 percent, opting to maintain the current rate. Lawmakers also turned down a recommendation to phase out statutory funding for key development agencies, including the Tertiary Education Trust Fund (TETFUND), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI).
Instead, the Senate introduced a 4 percent Development Levy to sustain funding for the affected agencies. Akpabio stated that these agencies are critical to human capital development and national economic progress, and ending their funding could cripple education and technological advancement.
According to the bill, the development levy will be distributed in the following proportions: TETFUND will receive 50 percent, the Nigerian Education Loan Fund 15 percent, NITDA 10 percent, NASENI 10 percent, the National Cybersecurity Fund 5 percent, and the Defence Security Fund 10 percent. The Company Income Tax rate remains at 30 percent as proposed.
President Tinubu had transmitted the four tax bills to the National Assembly on October 3, 2024, based on the recommendations of the Presidential Committee on Fiscal and Tax Reforms chaired by Taiwo Oyedele.
The initiative aims to modernise and simplify Nigeria’s tax structure while enhancing compliance and revenue generation.
The bills passed second reading in the Senate last November and were referred to the Senate Finance Committee for detailed review and public consultation.
Presenting the final report, Senator Musa said the committee conducted extensive consultations, including public hearings, to ensure broad stakeholder engagement.
On the VAT revenue-sharing formula, the committee recommended that the Federal Government receive 10 percent, state governments and the Federal Capital Territory 55 percent, and local governments 35 percent. It also retained 10 percent of funding each for TETFUND, NASENI, and NITDA, 5 percent for cybersecurity, and 10 percent for defence.
The House of Representatives passed all four tax bills at third reading in March 2025, shortly before adjourning for the Easter and Eid-el-Fitr holidays.