Tinubu at Mid-Term: Nigeria’s 2024 Tax Reform Bill and Fiscal Future
The Nigerian Senate has passed the 2024 Tax Reform Bill to third reading, finalising a landmark tax reform process that has drawn widespread criticism and pushback from stakeholders and the general public.
Coming just ahead of President Bola Tinubu’s second anniversary in office on May 29, 2025, the development presents a pivotal moment to examine Nigeria’s evolving tax administration and trace the trajectory of tax reforms since the 1990s.
The bill stems from the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee, established by President Tinubu in his first year in office to address Nigeria’s deepening fiscal challenges. The committee’s proposal comprises the Nigeria Revenue Service Establishment Bill, the Tax Administration Bill, the Nigeria Tax Bill, and the Joint Revenue Board Establishment Bill.
Together, these bills seek to overhaul Nigeria’s fragmented tax system, curb widespread evasion, streamline revenue collection, and eliminate multiple taxation, particularly those levies that disproportionately burden small businesses and low-income earners.
However, the proposed reforms were not without controversy. One of the most contentious provisions was the proposed amendment to the Value Added Tax (VAT) revenue-sharing formula, which sparked intense debate among stakeholders. Northern leaders, in particular, voiced concerns that the proposed structure would place their region at a disadvantage.
In its final version, the Senate addressed these concerns. The proposed increase in the VAT rate was rejected, with lawmakers opting to retain the existing 7.5% rate. The revised VAT revenue-sharing formula also reflects a compromise. Of the 55% VAT allocation to states, 50% will now be shared equally among all states, 20% will be distributed based on population, and 30% based on consumption, replacing the proposed sharing formula of 50% based on equality, 30% based on derivation, and 20% based on population.
With the bill’s passage, Nigeria moves one step closer to a more unified and equitable tax framework, though its implementation and public reception remain key questions as the Tinubu administration marks two years in office.
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