THE Federal Government is considering implementing a single-digit tax regime to alleviate the burden of multiple taxes on Nigerians.
The Chairman of the Presidential Committee on Fiscal and Tax Reforms, Taiwo Oyedele, shared this information yesterday during an interview.
He explained that all taxes will be reduced to single digits upon the completion of the ongoing reforms. A single-digit tax system means that citizens or businesses would only need to pay fewer than ten taxes over a specific period.
In the interview, titled “Tax Reforms: Why States Should Not Collect VAT,” Oyedele noted that his committee has established a framework to improve collaboration between tax authorities and states regarding data sharing, tax intelligence, and capacity building.
“Our goal is to ensure that when we finalize our reforms, all taxes will be reduced to single digits,” Oyedele stated.
He added, “We aim to empower trained tax authorities to handle tax collection while allowing others to concentrate on their primary responsibilities, fostering economic growth that benefits everyone.”
Oyedele further explained that the Nigerian tax administration bill aims to streamline taxpayer registration, return filing, assessments, tax audits, and the use of technology in tax administration. The committee is actively engaging with legislators to address their concerns and summarize the bill for them.
He described Nigeria’s current tax system as one of the most outdated in the world, calling the situation “embarrassing.”
“We are in 2024, and it would be unfortunate if anything were to hinder the reforms of Nigeria’s tax system. I believe we can resolve any differences to ensure the process continues and the bills are enacted,” he said.
On his X account yesterday, Oyedele reiterated that the federal government plans to reduce the overall tax burden on Nigerians while still generating sufficient revenue for the country.
“The objective is to lower the overall tax burden, not to increase it. By simplifying the tax system, harmonizing taxes, and addressing barriers to investment, these reforms will stimulate economic activity and enhance revenue generation for all levels of government,” he stated.
He outlined strategies the government intends to implement to increase tax revenue without raising the tax burden. These strategies include removing disincentives to business formalization, leveraging technology and data for intelligence, and simplifying the tax process.
“This approach will enable us to increase tax revenue without raising the tax burden, through various strategies such as eliminating disincentives to business formalization, utilizing technology and data for intelligence, simplifying taxes, and enhancing administrative capacity. Additionally, curbing tax evasion will create a level playing field for all taxpayers, rather than implicitly penalizing compliant taxpayers and rewarding those who evade taxes,” he explained.
Oyedele also emphasized that the government’s reforms will benefit both small and large businesses by establishing a harmonized single levy at a reduced rate.
“Some proposals include reducing the corporate income tax rate from 30% to 25% over the next two years and eliminating earmarked taxes on companies, replacing them with a harmonized single levy at a lower rate,” he said.
This development follows public concerns regarding the increasing and multiple taxation practices under President Tinubu’s administration.
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