The Federal Government (FG) has enacted the withholding tax bill proposed by the Presidential Fiscal Policy and Tax Reforms Committee, exempting manufacturers and small businesses from the burden of paying withholding tax. Taiwo Oyedele, chairman of the committee, announced this development to journalists on Thursday in Lagos.
“We sent the withholding tax proposal to the National Assembly for approval and I just heard it has been signed,” Oyedele confirmed.
Key Tax Reforms:
The tax advisory committee has put forward several significant recommendations aimed at simplifying and streamlining the country’s tax system. These include:
Reduction of Tax Types:
– The committee has recommended reducing the number of taxes from over 60 to just eight. The retained taxes are:
– Income Tax
– Value Added Tax (VAT)
– Property Tax
– Customs Duties
– Excise Tax
– Stamp Duties
– Special Levy
– Harmonised Levy
Centralized Tax Agency:
– A proposal has been made to establish the Nigerian Revenue Service as the central tax collection agency. This body would have sub-national departments, thereby eliminating over 100 different tax collection agencies currently in operation.
Budget Restructuring:
The committee has also suggested a comprehensive restructuring of the government budget. The proposed classifications include:
– Infrastructure
– Human Capital Investment
– Personnel Costs, Headcount & Productivity
– Administrative Overheads
– Debt Service & Sinking Funds
Additionally, the implementation of zero-based budgeting and the introduction of long-term appropriations are recommended to enhance financial management and planning.
Addressing Economic Challenges:
The committee has outlined several key strategies to address systemic issues within the economy:
– Combat systemic corruption
– Prioritize spending on basic needs to address multidimensional poverty
– Restrict borrowing to productive spending and self-financing projects
– Enhance the effectiveness of public procurement processes
These reforms are aimed at fostering a more efficient and transparent tax system, encouraging business growth, and ensuring sustainable economic development.
