The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, announced that the federal government aims to reduce the corporate income tax (CIT) rates in Nigeria over the next one to two years. He made this statement during his presentation at the Access Corporate Forum 2024, organized by Access Holdings Plc** in Lagos.
Mr. Oyedele emphasized the government’s focus on reducing the tax burden on businesses while improving tax collection efficiency to boost government revenues. He indicated that reducing the CIT rate is part of broader economic reforms to attract more foreign investment into Nigeria.
Currently, Nigeria has a tiered CIT structure:
– 30% for large companies with a turnover exceeding N100 million.
– 20% for medium-sized companies with a turnover between N25 million and N100 million.
– 0% for small companies with a turnover below N25 million.
Oyedele highlighted that reducing CIT could create a more business-friendly environment, making Nigeria more attractive to **foreign investors** while encouraging local businesses.
New VAT Regime
In addition to CIT reforms, Oyedele mentioned plans to eliminate taxes on basic consumer items such as food, education, and transport to stimulate production and reduce inflation. Under the proposed Value Added Tax (VAT) regime, businesses will be able to recover input credits on assets and services, helping to alleviate VAT costs and further reduce inflation.
Company Income Tax Collection Surge
According to the National Bureau of Statistics (NBS), Nigeria’s Company Income Tax (CIT) collections saw a 150.83% increase in the second quarter of 2024, reaching N2.47 trillion. This surge was driven by an 87.24% increase in foreign CIT payments, totaling N1.11 trillion, due to the foreign exchange unification policy. In contrast, local CIT grew by a more modest 35.1%, reflecting challenges faced by local businesses amid FX unification, which saw the Naira’s value drop significantly.
While foreign companies benefited from the FX unification policy, local businesses have experienced greater difficulties, underscoring the need for tax reforms to support domestic growth.
