From Adesuwa Tsan, Abuja
The Senate on Wednesday passed two of four proposed Tax Reform Bills: the Nigeria Revenue Service (Establishment) Bill, 2025, repealing the Federal Inland Revenue Service Act, and the Nigeria Tax Administration Bill, aimed at improving revenue assessment, collection, and accountability.
The bills, which followed a two-hour closed-door session and the adoption of the Senate Committee on Finance’s report led by Sen. Sani Musa, await House of Representatives’ concurrence and President Bola Tinubu’s assent to become law.
The Nigeria Tax Administration Bill replaces “derivation” with “place of consumption” for VAT revenue allocation, distributing 10% to the Federal Government, 55% to States and the Federal Capital Territory, and 35% to Local Governments. Among states, allocation is based on equality (50%), population (20%), and place of consumption (30%); for Local Governments, 70% uses equality (30%) and the rest population. The collection levy was reduced from 4% to 2%, as proposed by Sen. Seriake Dickson, to include oil revenues.
The Nigeria Revenue Service Bill designates the President as Board Chairman, with an Executive Vice Chairman, subject to Senate confirmation, as head of the Service. “The Chairman of the Board who shall be the President; and (b) Executive Vice Chairman who shall be the head of the Revenue Service and subject to confirmation of the Senate,” states Clause 7. Six Executive Directors, one from each geopolitical zone, ensure inclusivity, with no Director and Vice Chairman from the same state. The Service’s functions include assessing corporate taxpayers, reforming tax regimes, and seizing proceeds from tax fraud or evasion.
Penalties for non-compliance include: N100,000 for failure to register (Clause 100) in the first month, N50,000 monthly thereafter; N200,000 for failure to file returns (Clause 101) in the first month, N50,000 subsequently; N10,000 for individuals and N100,000 for companies for failure to keep records (Clause 102); and imprisonment up to three years for tax offences. Senate President Godswill Akpabio praised the Finance Committee and “elder senators” for resolving contentious issues, stating, “The passage of the bills have dispelled rumours that they were meant to serve the interests of a part of the country.”
Deputy Senate President Barau Jibrin commended the Elders Committee for addressing stakeholder concerns. “Initially, there were disagreements and there were rancors here and there. But the Senate… decided to establish this committee, Committee of Elders (Special Committee), to look at all those areas of contention,” he said. The remaining bills, Joint Revenue Board (Establishment) Bill, 2025, and Nigeria Tax Bill, are slated for plenary on Thursday, May 8, 2025.