Nigeria's Senate has passed significant tax reform bills in May 2025, signaling a modernization of the nation's fiscal framework. President Tinubu initially presented these bills to the senate as part of a comprehensive strategy to revamp the existing tax system.
The approved bills include the Nigeria Revenue Service Establishment Bill, which repeals the Federal Inland Revenue Service, and the Joint Revenue Board Establishment Bill, aimed at streamlining tax collection processes. A proposal to increase the value-added tax (VAT) from 7.5% to 10% was rejected, keeping the rate at 7.5%.
Instead of eliminating funding for agencies like TETFUND, NITDA, and NASENI, the senate introduced a 4% development levy to support their operations. This levy will be allocated as follows: TETFUND (50%), the Nigerian Education Loan Fund (15%), NITDA (10%), NASENI (10%), the National Cybersecurity Fund (5%), and the Defence Security Fund (10%). The legislation also permits VAT input claims on fixed assets, overhead costs, and administrative services.
Senate President Godswill Akpabio praised the reforms for their potential to strengthen governance and enhance revenue collection. Deputy Senate President Barau Jibrin commended the senate for overcoming initial disagreements through a committee of elders and thorough public hearings. The House of Representatives has already passed the four bills.
This article is based on our author's analysis of materials taken from the following resources: Nairametrics, The Nation Newspaper, Vanguard News, BusinessDay, Punch Newspapers, Leadership Newspapers, Daily Trust, FRCN HQ, Sahara Reporters, and The Guardian Nigeria News.