Senate retains 7.5% VAT, okays tax appeal tribunal
The Senate on Wednesday passed two of the four controversial tax reform bills transmitted to it for approval last year by President Bola Ahmed Tinubu, retaining the 7.5 per cent Value Added Tax (VAT). The passage of the bills was sequel to the consideration and adoption of a report of the Senate Committee on Finance […]
Senate
The Senate on Wednesday passed two of the four controversial tax reform bills transmitted to it for approval last year by President Bola Ahmed Tinubu, retaining the 7.5 per cent Value Added Tax (VAT).
The passage of the bills was sequel to the consideration and adoption of a report of the Senate Committee on Finance which recommended that the bills be passed.
Chairman of the Senate Committee on Finance, Senator Mohammed Sani Musa (APC, Niger East) presented the report during plenary.
The four bills are, Joint Revenue Board (Establishment) Bill, 2025; Nigeria Revenue Service (Establishment) Bill, 2025; Nigeria Tax Administration Bill, 2025; and Nigeria Tax Bill, 2025.
However, the two tax bills passed yesterday by the Senate were the Nigeria Revenue Service (Establishment) Bill, 2025, and the Nigeria Tax Administration Bill, 2025.
The four bills were referred to the Senate Committee on Finance for further legislative action after their second reading by the Senate in November 2024.
The bills had generated heated debate in the polity, thereby forcing the Senate to defer legislative work on them, including organising a public hearing.
The Senate went into extensive consultations with critical stakeholders in the polity including state governors to get their buy in for smooth passage. The opposition to the bills came majorly from the political elites in the North and Civil Society Organisations.
The clauses containing the proposals for VAT collection and administration had triggered heated criticisms among opponents of the bills.
VAT distribution formula and 7.5% rates
Key among the clauses considered and adopted by the Senate yesterday included VAT distribution formula based on “State governments: Equality – 50%; Population -20%; Place of consumption -30%; Local Governments -70%; Equality -30%.”
The Senate rejected the proposal for incremental review of VAT rates and approved that the current 7.5% VAT rate be sustained.
Funding for NASENI, TETFund retained
The Senate also recommended the continuous financing of the Tertiary Education Trust Fund (TETFund), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA) from development levies.
The Senate recommended that “Development Levy: Retain the funding of TETFUND, NASENI, NITDA, Cyber Security and NELFUND from the Development levy using the following sharing formula:
“Tertiary Education Trust Fund 50%; Nigerian Education Loan Fund 15%; National Information Technology Development Fund – 10%; and the National Agency for Science and Engineering Infrastructure 10%.
“Others are, the National Cyber security Funds – 5% and the Defence Security Funds – 10%.
Reforming tax collection
The Senate also approved the clause that ensures the independence of the Tax Ombud by expunging provisions for external gifts and grants, making it solely reliant on the Consolidated Revenue Fund with National Assembly approval.
Similarly, the Tax Appeal Tribunal will now be funded through the national budget rather than relying on the Federal Inland Revenue Service (FIRS).
Senate President Godswill Akpabio who presided over the plenary, commended his colleagues for staying till about 5.30pm to consider the two bills.
He said the Senate would consider and pass the remaining bills which include the Joint Revenue Board (Establishment) Bill, 2025 and the Nigeria Tax Bill, 2025 today.
In his remarks, the Deputy President of the Senate, Barau Jibrin, commended the Senate for passing the bills despite the disagreements that greeted their introduction at the beginning.
Barau said, “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 has been shown in these bills.”