The federal government is working towards a single-digit tax system to alleviate the pressure of multiple taxes on Nigerians, as part of ongoing fiscal and tax reforms.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal and Tax Reforms, made this revelation in an interview on Channels Television on Monday.
Oyedele explained that under the proposed reforms, all taxes would be reduced to single digits. “Our hope is when we are done with our reforms, all the taxes will be down to single digits,” he said. This means that citizens and businesses would pay no more than 10 different taxes within a given period.
He further emphasized the committee’s efforts to enhance collaboration between tax authorities and states in terms of data sharing, tax intelligence, and capacity building. “We want to be able to let the authorities trained on tax matters collect taxes while others focus on primary mandates and watch the economy grow in a way that benefits everyone,” Oyedele added.
Addressing the challenges of Nigeria’s current tax system, Oyedele described it as “one of the most backward in the world,” calling the situation “embarrassing.” He stressed the importance of progressing with tax reforms, stating, “We are in 2024, and anything that will stop the reforms of Nigeria’s tax system will be really sad.”
In his social media post on Monday, Oyedele assured Nigerians that the government aims to reduce the overall tax burden while still ensuring sufficient revenue generation. “The plan is to reduce the overall tax burden, not increase it,” he said, adding that simplifying the tax system, harmonizing taxes, and addressing investment barriers would ultimately boost economic activity and enhance revenue generation for all levels of government.
The reforms will also target improving tax compliance and reducing evasion. “We can raise tax revenue without raising tax burden through various strategies including removal of disincentives to business formalization, use of technology and data for intelligence, tax simplification, and enhanced administrative capacity,” Oyedele explained.
One key proposal under the reform is the reduction of corporate income tax from 30% to 25% over the next two years. Additionally, earmarked taxes on companies would be replaced with a harmonized single levy at a reduced rate. This move is expected to benefit both small and large businesses.
Oyedele’s comments come amid growing public concerns over the increasing tax burden under President Tinubu’s administration. The tax reforms are seen as a step towards easing these concerns while fostering a more business-friendly environment.
