Eight months after President Bola Ahmed Tinubu transmitted four tax reform bills to the National Assembly for consideration and passage, the Senate, yesterday, began consideration of the bills, following a review of contentious clauses.

After hours of deliberations, the Senate retained Nigeria’s Value-Added Tax (VAT) rate at 7.5 per cent, rejecting a proposed hike to 10 per cent, while approving tax reforms aimed at improving revenue collection and accountability.

The two bills, the Nigeria Revenue Service (Establishment) Bill (NRSEB) and the Nigeria Tax Administration Bill (NTAB), were read for the third time and passed. The remaining two bills, the Nigeria Tax Bill (NTB) 2024 and the Joint Revenue Board (Establishment) Bill (IRBEB), are set to be considered later today.

The legislative body also dismissed proposals to phase out funding for the Tertiary Education Trust Fund (TETFund), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI). Instead, it introduced a four per cent development levy to ensure the continued funding of these critical institutions.

The Senate explained that these government agencies are crucial for human capital and economic development and warned that withdrawing their funding could lead to stagnation in education and hinder technological advancement.

The Senate approved a funding formula for the development levy. TETFund is to receive 50 per cent of the levy, while the Nigerian Education Loan Fund will receive 15 per cent. The National Information Technology Development Fund and NASENI will each get 10 per cent, while five per cent will go to the National Cybersecurity Fund, and the remaining 10 per cent will be allocated to the Defence Security Fund.

Adopting a report presented by Sani Musa, the chairman of the Senate Committee on Finance, the Senate retained the VAT rate at 7.5 per cent and clarified that VAT inputs will now be allowable for fixed assets, overhead costs, and administrative services. The Company Income Tax rate was also fixed at 30 per cent.

On VAT revenue distribution, the bill stipulates that 10 per cent will go to the federal government, 55 per cent to state governments and the Federal Capital Territory, and 35 per cent to local governments. The revenue allocated to states and local governments will be shared based on equality, population, and place of consumption.

Key highlights of the passed bills include the establishment of the Nigeria Revenue Service to replace the Federal Inland Revenue Service (FIRS) and the appointment of an Executive Vice Chairman to head the revenue agency, with the board chaired by a non-executive Chairman.

The Service Cost of Collection has been reduced from four per cent to two per cent for the tax collection agency. The Nigeria Revenue Service Bill also outlines the creation of six Executive Director positions, one from each of the country’s geopolitical zones, and mandates that the Secretary of the Board be a qualified legal or financial professional.

The Senate also introduced stringent penalties for tax-related offences, including fines for failure to register or file returns and imprisonment of up to three years for serious violations.

However, some of the clauses quickly became a subject of discontent when the Senate dissolved into the Committee of the Whole to consider each clause.
Clause 22 drew immediate attention. The clause proposed that “three per cent of the total revenue collected by the service, which shall be appropriated by the NASS, subject to the review of the percentage from time to time, depending on the economic situation or as the economic situation requires”.
Senator Aliyu Wadada, however, raised concerns, proposing an amendment to reduce the figure to two per cent, citing the significant size of revenues involved, which he said was more than the combined budgets of 16 states.

He argued that such large sums required cautious handling, especially as they include both oil and non-oil revenue. The amendment was adopted. Clause 39 also sparked debate as Senator Adams Oshiomhole, supported by Senator Ibrahim Dankwambo, warned against excessive legislative involvement in operational financial approvals .

“Anything done should be overseen by the Senate, but this should not mean day-to-day interference. That would create bottlenecks and delay urgent financial decisions,” Oshiomhole said.

Senator Musa, however, defended the clause, underscoring that the intention was to strengthen the National Assembly’s oversight and ensure accountability in the use of public funds.

He clarified that the provision was not meant to hinder timely financial action but to prevent unauthorised disbursements. The clause was however, retained.

The Senate President, Godswill Akpabio, announced the bills’ passage after a majority of senators supported them through a voice vote. “These bills will add immense value to governance and transform how taxes are collected and shared in Nigeria,” Akpabio said.  He further assured that the remaining two bills would be finalised today, even if extended sitting hours were required.

“We are committed to concluding the outstanding bills tomorrow (Thursday), even if we have to stay here until 10:00 p.m.,” he said.  During the plenary, Deputy Senate President Barau Jibrin praised lawmakers’ maturity in resolving earlier disagreements.

“It is time to congratulate the entire Senate and, in particular, the Committee on Finance and the Elders Committee for the wisdom and leadership that have been shown in these bills,” he said.

“Initially, there were disagreements and rancour here and there. But the Senate, standing on its position as the highest assembly in the land, decided to establish this committee—committee of elders—to examine all areas of contention and hear the views of religious leaders, regional organisations, and other stakeholders .

“Now, thank God, the committee also, in its wisdom, sat with everyone, conducted a very robust public hearing, and brought us to where we are now. Thank God, all these areas have been resolved,” Jibrin concluded.

Meanwhile, a university lecturer, Prof Godwin Oyedokun, has urged state governments and other stakeholders to support President Bola Tinubu’s tax reform, which he described as a pathway to prosperity for Nigeria.

Oyedokun made this call yesterday in Abuja at the 2025 Award of Excellence, which was organised by the Society of Women in Taxation (SWIT), FCT Chapter.
The professor, who lectures at the Department of Accounting and Financial Development, Lead City University, Ibadan, described the tax reform initiated by the President as one of the best developments in Nigeria.

“I am not a fan of any government, but when a government gets it right, I will say it; and if they do not, I will also say it,” he said.

“The content of the bill is better than what we have currently. So, I want everybody to support the reform. State governments, lower-income earners, and others will benefit massively from Tinubu’s tax reform because it will relieve them from unnecessary taxes, and we will no longer need to tax poverty.

“Prosperity will come, and the government will also gain from it. You can see incentives for companies, start-ups, the informal sector, and entrepreneurs, who will now be able to thrive.”

Oyedokun highlighted the benefits of the reform, particularly in the harmonisation of taxes across the country.

“When it comes to the harmonisation of taxes in Nigeria, this bill will ensure that we achieve it. There will no longer be touting in the tax arena.

“Apart from that, all the disparate pockets of tax laws we currently have will be codified into a single text, with each chapter dedicated to a specific tax law,” Oyedokun said.