The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has revealed that the Federal government is developing a system to grant tax relief to 95% of Nigeria’s informal economy. This initiative targets businesses earning N25 million annually or less and aims to exempt them legally from various taxes, including withholding tax, company income tax, and payee on staff salaries. Oyedele emphasized the importance of supporting small businesses to thrive and eventually contribute to tax revenue as they grow.
The proposed reforms will focus on taxing only the remaining 5% of the informal sector, as well as the middle class and elite, while ensuring sustainability through legislative changes. Oyedele stressed the need for government officials to lead by example in tax compliance. The committee also seeks to address issues with existing taxes outlined in the constitution through reviews and legislative processes.
The committee’s report will undergo standard legislative procedures to obtain legal backing. Oyedele highlighted the aim of reducing tax burdens for small businesses and low-income earners to alleviate financial pressures. Additionally, efforts are being made to harmonize tax systems across all levels of government and improve tax collection efficiency. The ultimate goal is to enhance the fiscal system’s effectiveness, prioritize spending on impactful projects, and alleviate poverty.
The ICIR reported on the establishment of the presidential tax committee and its mandate to increase the tax-to-GDP ratio to 18% within three years, as well as to streamline tax laws hindering business operations and promote wealth creation and trade facilitation.
