The bill presented to the National Assembly by the Executive has generated a lot of controversial debates and interest within the wife spectrum of the society. It this appears that no one is left out of it. As for me, it’s a good development and interesting too to see the citizenry showing interest in what concerns them now and in the future. It’s in the spirit of this consciousness that I have taken time to share my perspective on the matter, even though it’s evolving.

Subject: Analysis of the Newly Proposed Tax Bill

I would like to address certain perspectives regarding the new tax bill. It appears that some parties may wish to influence my interpretation of the bill, and certain organizations might selectively present elements of my statement to align with their agendas.

Having reviewed the bill, I would assess it positively, rating it between 6 and 7 out of 10. The key areas of interest within the bill include:

1. Tax harmonization
2. Reduction of multiple taxes
3. Establishment of a tax ombudsman
4. Introduction of specific tax exemptions
5. Review of outdated colonial tax legislation
6. Abolishment of stamp duty
7. Creation of the National Revenue Service
8. Clarity regarding audit review periods
9. Modifications to Withholding Tax
10. Reduction of Company Income Tax for larger corporations
11. Zero tax for companies with a turnover of less than 50 million naira
12. Compensation in the proposed tax regime for minimum wage tax exemptions, consistent with the current regime.

However, there are important concerns that should be addressed BEFORE the bill is passed. If not, it will make a mess of the good efforts.

1. We must be cautious regarding the assumptions underpinning these reforms. Previous assumptions, such as those related to currency fluctuations, have had severe economic repercussions. It has thrown over 10 million into abject poverty, according to the World Bank chief.
2. The proposed first-level tax rate of 15% is significantly higher than the current rate of 7%. This adjustment requires careful consideration, as the quality of currency is an economic issue rather than solely an accounting or taxation matter.
3. A Value Added Tax (VAT) increase of 10-15% could have adverse effects on a fragile economy. It is advisable to maintain the current VAT rate of 7.5% for the upcoming year.
4. It is essential to remove any provisions within the bill that may suggest favouritism and discrimination, if any.
5. The potential for increased inflation must be taken seriously; retaining the VAT at 7.5% may help mitigate this risk. Engaging with economic scholars will provide valuable insights into this matter.
6. How would we ensure that the consumption points are accurately reflected in VAT filing reports, considering that a substantial percentage of businesses are small and medium-sized enterprises (SMEs), which often remain unstructured and unorganized? Although these businesses may not pay Corporate Income Tax, their VAT remittances still need to be effectively managed.

In terms of recommendations:

1. The committee should illustrate the implications of a 60% derivation share to state governors, ideally by utilizing at least one state from each geopolitical zone.
2. I recommend retaining the VAT rate at 7.5% for 2025 to prevent potential inflationary pressures. Saying there would be no inflation is like a mechanic telling a doctor how to operate his pregnant wife in the labour room.
3. It is advisable that the bill be amended rather than completely discarded.

Sir Jacob Nandi David, FCA, CPFA. Chartered Accountant & Business Consultant/Advisor [email protected] 08036341623/09039363888 Abuja.

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PBAT Tax Reforms, the Burning Issues – Sir Jacob Nandi David, FCA