Nigerians Who Make More Than ₦100 Million a Year Are Subject to 25% Tax Rates.FG.

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has announced that affluent Nigerians earning over ₦100 million monthly will be subjected to a 25% personal income tax rate if a proposed tax bill is approved by the National Assembly. This statement was made during a breakout session at the ongoing 30th Nigeria Economic Summit, organized by the Nigerian Economic Summit Group in collaboration with the Ministry of Budget and National Planning on Monday in Abuja. Oyedele pointed out that 90% of current taxpayers are individuals who should not be liable for taxation. He advocated for a more efficient and fair tax system within the country. He stressed the importance of finding a balance between reducing the tax burden on lower-income earners and ensuring that wealthier individuals contribute a fair share to government revenue. "If you earn ₦100 million a month, we will be taking up to 25% from the affluent. This is necessary to balance the budget," Oyedele remarked. He affirmed the government's commitment to ensuring that the appropriate individuals fulfill their tax obligations, highlighting that his committee is diligently working towards this objective. The proposed changes are anticipated to take effect in January 2025, contingent upon the bill's passage by lawmakers. The reforms are also designed to alleviate the tax burden on businesses. For middle-income earners earning ₦1.5 million or less per month, Oyedele indicated that their personal income tax responsibilities would be reduced, while those with higher earnings would experience gradual increases in their tax rates, ultimately reaching 25%. Lower-income earners would be entirely exempt from personal income tax. Oyedele further explained, "Currently, any VAT that businesses pay on assets—whether for constructing a factory, purchasing a laptop, or acquiring vehicles—is borne by them. This raises costs, leading to higher pricing. Once our reforms are enacted, businesses will receive a full 100% credit on services and assets." Individuals will be subject to taxation once a determination is made regarding their obligation to pay. It has been observed that nearly 90 percent of those currently fulfilling their tax duties are individuals who, under normal circumstances, should not be liable for such payments, he stated. This observation led to the conclusion that 97 percent of the informal sector ought to be exempt from taxation. There is a lack of understanding regarding our perspective; these individuals are not in a position to pay taxes; they are merely striving to make ends meet. He further noted that inflation has already imposed a chaotic form of taxation on the populace, diminishing the purchasing power of their income without the necessity of legislative action. In response to inquiries about tax incentives and waivers, Oyedele contended that indiscriminate incentives can be detrimental to the economy, and that eliminating superfluous incentives could benefit the business sector without adversely affecting government revenue. "We cannot accommodate all the incentives being requested. We believe that the most significant opportunity lies in the removal of these incentives, and that is precisely what we are undertaking," Oyedele remarked. Moreover, the corporate income tax rate is poised to decrease from 30 percent to 25 percent, which Oyedele characterized as a substantial benefit for businesses. Other notable tax reforms include the reduction or elimination of VAT on essential goods and services, such as food, healthcare, education, housing, and transportation. These essential services constitute a significant portion of the expenditures for lower-income households, and the proposed reforms are designed to alleviate their financial strain. However, Oyedele recognized that not all sectors would experience advantages from the lowered tax rates. For other goods and services, the VAT rate will be increased to maintain a balanced government revenue stream. Concerning the efforts of his committee to ensure that the appropriate individuals fulfill their tax obligations, Oyedele indicated that the team would employ primary data identification methods to accurately incorporate the correct demographic of taxpayers into the tax system.