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New tax policy will exempt 95% of small businesses – presidential committee

THE chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said the Federal government is working on a system that would provide tax relief for 95 per cent of the Nigerian economy’s informal sector.

Oyedele reportedly hinted at the committee’s closing session on Sunday, May 12 in Abuja.

The 95 per cent target will fall on businesses earning N25 million a year or less from the various taxes, he said, explaining that the committee was using data for its decisions.

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“So, we think that 95 per cent of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff.

“We think that the informal sector are people who are trying to earn legitimate living. We should allow them to be and support them to grow to a point where they can then have the ability to pay taxes,” Oyedele said.

He said the reforms would focus on five per cent of that sector, the middle class and the elite for taxes and that the committee was drafting the laws to effect the necessary changes in the country’s fiscal policy and tax reform ecosystem.

The new laws will also ensure that reviews become sustained by subsequent governments, he said, adding: “We don’t want this whole effort to go down the drain, after one or two years.”

The tax committee chairman anticipates that the proposed tax law will be obeyed by all and sundry, especially by the authorities.

‘’We think they have to lead by example by showing that they have paid the taxes, not only on time but correctly to the lawful authorities as contained in the various laws,” Oyedele said.

Some taxes which Nigerians complained about are those already in the Constitution, which the committee called for their review, he pointed out.

He said his committee’s report would pass through the normal process of legislation to give it full legal backing.

“So, our expectation is, as we progress now from ideation, proposal to implementation, you’ll see less and less of those issues and then you’ll see harmony in the direction of the fiscal system.

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‘’Not only in the number of taxes we collect, you will also see an improvement in how those monies are being spent in terms of priority and efficiency of spending and focusing on what impacts on the masses within multidimensional poverty line,” Oyedele said.

He noted also that the committee had been working with the sub-nationals and the local governments in harmonising the tax system in the country.

‘’So, we’re convinced, and that’s what the data tells us, that the right path we need to follow is the path where we repeal many of these taxes, harmonise whatever is left.

‘’We think we can keep that within single digit across local government, state and federal government combined, and then improve the efficiency of collecting those taxes.




     

     

    ‘’We are also very convinced that we need to increase the threshold of exemption for small businesses, for low-income earners because if you can’t make ends meet, the last thing you want is someone asking you to pay tax,” he added.

    The ICIR reported that Nigeria’s President Bola Tinubu had on July 6, 2023, set up the presidential tax committee and appointed Oyedele as chairman.

    The committee, later inaugurated on August 8, was charged with a mandate to achieve an 18 per cent tax-to-GDP (tax to gross domestic product) ratio within three years, among other responsibilities.

    In a report by The ICIR, Oyedele said that the committee would focus on repealing Nigerian tax laws inhibiting the ease of doing business in the country and promoting trade facilitation and wealth creation.

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