President Bola Tinubu has taken a major step towards overhauling Nigeria’s tax system. He has sent four tax reform bills to the National Assembly, which aim to improve the country’s tax structure and boost economic growth.
Among these reforms is a proposal to rename the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS). This move is part of a broader plan to modernize the tax administration in Nigeria and make it more efficient.
The bills were presented in letters sent to both the Senate and the House of Representatives. The letters were read aloud by Senate President Godswill Akpabio and Speaker of the House, Tajudeen Abbas.
One of the bills is titled “The Nigeria Revenue Service (Establishment) Bill.” This bill seeks to repeal the Federal Inland Revenue Service (Establishment) Act of 2007 and establish the Nigeria Revenue Service (NRS).
The role of the NRS will be to assess, collect, and account for revenue that goes to the federal government. In essence, it would take over the responsibilities of the FIRS, but under a new name and with reforms aimed at making the agency more efficient.
Another important bill is the “Nigeria Tax Bill,” which aims to provide a consolidated fiscal framework for taxation in Nigeria. This bill will bring together all tax laws in the country under one framework, making it easier to understand and comply with the tax system.
The third bill is the “Nigeria Tax Administration Bill,” which is designed to create a fair and clear legal framework for the administration of taxes. This bill will focus on making tax administration easier for both taxpayers and tax authorities. It also aims to reduce the number of tax disputes by providing clear guidelines for tax collection.
Lastly, the “Joint Revenue Board (Establishment) Bill” aims to create a Joint Revenue Board, a Tax Appeal Tribunal, and an Office of the Tax Ombudsman. These institutions would harmonize and coordinate tax administration in Nigeria, as well as resolve disputes that may arise between taxpayers and the government.
President Tinubu emphasised that the proposed tax bills are critical for strengthening Nigeria’s economy. According to him, the reforms will improve tax compliance, reduce tax evasion, and strengthen the institutions responsible for collecting revenue.
In his letter to the National Assembly, Tinubu stated, “I am confident that these bills, once passed into law, will encourage and stimulate the economy.”
He further added that the bills would create a more transparent and effective tax system, which will help build trust between taxpayers and the government.
Nigeria’s economy relies heavily on oil revenue, but this source of income has become unstable due to fluctuating global oil prices. As a result, the country has faced repeated budget shortfalls and rising debt.
Experts have long called for Nigeria to diversify its revenue sources and improve its tax collection. At the moment, Nigeria’s tax-to-GDP ratio is one of the lowest in the world, at around 6%. For comparison, many other African countries have tax-to-GDP ratios above 15%.
The low tax revenue has made it difficult for the government to fund critical infrastructure, social services, and public sector salaries. Therefore, improving the tax system is seen as a vital step in addressing the country’s economic challenges.
One of the more noticeable changes in the reform package is the proposed renaming of the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS).
Though this might seem like a simple name change, it reflects deeper reforms within the tax administration system. The new name suggests a broader and more centralized approach to tax collection.
The idea is to create a stronger and more professional body that will be more effective in gathering revenue for the government. It also aims to improve the image of the tax collection agency and boost taxpayer confidence.
