Taiwo Oyedele, Chairman of the Presidential Tax Reforms and Fiscal Policy Committee, has called for urgent reforms in Nigeria’s tax system, describing it as one of the most business-unfriendly in the world.
Speaking during a Nairametrics Twitter Space titled “Tax Reform Bills: Clarifying the sticky issues with Taiwo Oyedele” on Monday, Oyedele painted a grim picture of how the current tax framework stifles business growth and hampers the nation’s economic development.
Speaking on the impact of taxation on the nation’s development and business environment, Oyedele stated, “Nigeria’s tax system is one of the most backward. I say that based on facts. What that means is that it’s not working for us today as a country. And it is unlikely to shape our developmental aspirations.”
Oyedele’s concerns stem from the multiple layers of taxes imposed on businesses in Nigeria, which he argues stifle economic growth and discourage investments. He elaborated on the burdensome structure:
“The [tax] system is business-unfriendly. It does not support businesses. Nigerian businesses bear some of the highest tax burdens in the world. You pay corporate tax of 30 percent. You pay education tax; you pay information technology tax; you pay for science and engineering; you pay police trust fund levy. And then you pay withholding tax on whatever profit is left at 10 percent. And these are just the official ones. By the time you sum it up, you are over 40% already. That ranks Nigeria as [one of the] top 10 most heavily taxed environments in the world. And this is a country where you need all the investments that you can attract.”
Oyedele emphasized that the heavy tax burden contrasts sharply with Nigeria’s developmental needs. He argued that the tax system should be restructured to attract investments rather than drive them away, especially in a country where economic growth is critical for addressing widespread unemployment and poverty.
Highlighting the urgency of reform, Oyedele called for a re-evaluation of the nation’s tax policies to align with its developmental goals. He advocated for a simplified, transparent, and fair tax system that encourages compliance, attracts foreign investments, and promotes the growth of small and medium-sized enterprises (SMEs).
Oyedele’s critique comes at a time when neighboring countries in Africa are implementing more business-friendly tax regimes to attract global investments. Nigeria’s current approach, he argued, makes the country less competitive in the global market.
“Taxing poverty”
Oyedele noted the alarming proliferation of taxes in the country, many of which disproportionately impact low-income earners and small businesses.
Oyedele said “Officially, there are over 60 different taxes individuals and businesses have to pay. Unofficially, those numbers are over 200. And they keep increasing every other day. We are taxing poverty in the sense that by just earning even N1000 a day which is barely N30,000 a month, you have some taxes to pay.”
What you need to know
In October 2024, President Bola Tinubu delivered the Tax Reform Bills to the National Assembly based on the recommendations of the Oyedele committee.
- The bills include the Nigeria Tax Bill 2024, which intends to provide a fiscal framework for taxation in the country, and the Tax Administration Bill, which aims to provide a clear and comprehensive legal framework for all taxes in the country and eliminate conflicts.
- Other bills include the Nigeria Revenue Service Establishment Bill, which is likely to abolish the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.
- On October 29, 2024, the Northern Governors Forum, which represents the region’s 19 governors, voted against the bill, particularly the Value Added Tax-sharing formula.
- At a meeting in Kaduna, the governors instructed federal lawmakers from their respective states to vote against the proposals when they came up for debate in both chambers of the National Assembly.
Two days later, the National Economic Council, presided over by Vice President Kashim Shettima, advised the Federal Government to withdraw the bills to allow for broader consultations among critical stakeholders, a recommendation rejected by the President in a statement issued by his spokesman, Bayo Onanuga.
