Nigeria’s Senate has approved two of the four sweeping tax reform bills aimed at overhauling the country’s outdated revenue framework, following months of debate and public scrutiny.
The Nigeria Tax Administration Bill 2024 and the Nigeria Revenue Service (Establishment) Bill 2024 were passed on Wednesday, May 7.
The remaining two, the Nigeria Tax Bill 2024 and the Joint Revenue Board (Establishment) Bill 2024, are expected to be finalised on Thursday.
Senate President Godswill Akpabio confirmed the passage after a majority voice vote.
He announced that a harmonisation committee will reconcile the Senate and House versions before forwarding them to President Bola Tinubu for assent.
“These bills will add immense value to governance and transform how taxes are collected and shared in Nigeria,” Akpabio said.
“We are committed to concluding the outstanding bills tomorrow, even if we have to stay here until 10 p.m.,” he added.
The decision followed an hour-long closed-door session and a comprehensive clause-by-clause review.
Key Changes: VAT formula, revenue boards, agency oversight
The Senate retained the current 7.5% VAT rate but approved a new sharing formula:
- Federal Government: 10%
- States and FCT: 55%
- Local Governments: 35%
For states, the distribution will be based on:
- 50% equality
- 20% population
- 30% place of consumption
For local governments:
- 70% equality
- 30% population
In addition, funds were earmarked for key sectors:
- 10% each for TETFund, NASENI, and NITDA
- 5% for cybersecurity
- 10% for security and defence
Senator Sani Musa, Chairman of the Senate Committee on Finance, said the bills were thoroughly vetted.
Over 64 organisations, including civil society groups, participated in the public hearings.
Musa said the reforms would simplify tax compliance, stimulate the economy, and boost investor confidence.
Revenue Service Reforms
The Nigeria Revenue Service (Establishment) Bill introduced major changes:
- The President will chair the Revenue Service Board.
- An Executive Vice Chairman, confirmed by the Senate, will lead day-to-day operations.
- Six Executive Directors will be appointed — one from each geopolitical zone.
Rules ensure that no Executive Director and the Vice Chairman come from the same state.
Clause 4 broadens the Service’s powers, allowing it to assess corporate taxpayers, work with ministries to review tax policies, and track, freeze, or seize proceeds of tax fraud.
Clause 13(2) requires the Board Secretary to be a lawyer, chartered accountant, or chartered secretary with at least a Deputy Director rank.
The Service must submit its annual reports within three months of the fiscal year-end.
Tougher penalties for non-compliance
The Senate introduced stiffer penalties to curb tax evasion:
- Failure to register: ₦100,000 first month, ₦50,000 each additional month
- Failure to file returns: ₦200,000 first month, ₦50,000 monthly thereafter
- Failure to keep proper records: ₦10,000 fine for individuals, ₦100,000 for companies
Serious violations could result in up to three years’ imprisonment.
Senator Seriake Dickson also successfully moved an amendment reducing the Revenue Service’s commission from 4% to 2%, citing concerns about oil revenue inflows inflating agency funds.
State tax agencies and oversight powers
Clause 22 was amended to allow states to set up their own Revenue Tax Boards, boosting fiscal independence.
Clause 39, however, stirred heated debate.
Senator Adams Oshiomhole warned against tying financial decisions too tightly to legislation, while Senator Ibrahim Dankwambo backed him.
Senator Sani Musa responded that oversight measures were necessary to prevent misuse of public funds.
Former House Speaker and now Senator Aminu Tambuwal argued that the National Assembly lacked constitutional authority to create state-level tax bodies.
He called for the deletion of Clauses 87 to 97, an issue that remains contentious.
Next steps
A harmonisation committee will merge the Senate and House versions of the bills before they are sent to the President for signing.
Akpabio thanked the Finance Committee and elder statesmen for steering discussions with religious leaders and regional groups to ease tensions.
“These reforms will modernise Nigeria’s revenue system and address public fears that the bills were sectional or discriminatory,” he said.
Deputy Senate President Barau Jibrin also praised the Senate’s ability to resolve initial resistance through “constructive dialogue and consensus building.”
