Nigeria’s Tax Policy Reform Committee Presents 20 Key Recommendations

The Presidential Fiscal Policy and Tax Reforms Committee announced Tuesday it has submitted its report, containing key recommendations to address critical economic issues, to the President.

These recommendations cover a range of economic challenges, including exchange rate management, the impact of fuel subsidy removal, inflation control, and the facilitation of economic growth.

The Committee, headed by former PwC tax chief, Taiwo Oyedele, was set up by President Bola Ahmed Tinubu in July to review and advise on reforms to shape Nigeria’s fiscal policy and tax system.

The Committee was tasked with addressing fiscal governance, revenue transformation, and economic growth facilitation – with its work divided into three phases:

Quick Wins within 30 days: This phase focused on identifying and implementing immediate measures and actions that could yield quick results and improvements in the fiscal and economic landscape.

Critical Reforms within 6 months: In this phase, the committee worked on more significant and long-term reforms that were expected to bring about substantial changes in fiscal policies and economic growth.

Implementation within 1 year: The final phase involved the implementation of the recommended reforms and policies, ensuring that they were effectively executed to achieve the desired outcomes.

The committee announced its recommendations as follows:

1. Measures to address duplication of functions in public service, ensure prudent public financial management, and optimize value from government assets and natural resources
2. Policy signaling and collaboration by MDAs, economic management, and policy execution team
3. Use of technology “Data4Tax” to expand the tax net
4. Increase personal income tax exempt threshold and personal relief allowance
5. Tax break for the private sector in respect of wage increases to low-income earners, transport subsidy and net increase in employment
6. Permit the payment of taxes on foreign currency-denominated transactions in Naira for Nigerian businesses.
7. Remove impediments to global employment opportunities for Nigerians based in Nigeria
8. Suspension of VAT on diesel and tax waivers on CNG, CNG conversion, and renewable energy items
9. Comprehensive review of tariffs on the 43 items unbanned from accessing forex in the official market and fiscal policy review of other items prohibited for imports
10. Reforms of Withholding Tax Regulations to ensure simplicity and ease the pressure on the working capital of businesses
11. Facilitate the use of mobile phones for conditional cash transfers and introduce a spending framework for subsidy removal and forex reform windfall, including a national portal to track spending by FG, states, and local governments
12. Suspension of multiple taxes which place burdens on the poor and small businesses and compensate with windfalls revenue of certain agencies
13. Expand the official foreign exchange market to incorporate BDCs, forex apps, and retail fx dealers, and outlaw transactions in the black market
14. Digitalise Nigeria’s fx regime and discourage speculative demands and hoarding of fx in cash
15. Imposition of excise tax on foreign exchange transactions outside the official market
16. Implement forward contracts for the importation of PMS as a short-term measure pending improvement in key economic indices
17. Discontinue with the FX verification portal and requirement for Certificate of Capital Importation and export proceeds restriction
18. Address impediments to export promotion and bottlenecks regarding Exports Expansion Grants, and remove restrictions on repatriation and use of export proceeds by exporters
19. Modify Tax ProMax to allow taxpayers to make part payments of outstanding tax liabilities
20. Grant waiver of penalty and interests on the condition of full payment of outstanding tax liabilities on or before 31 December 2023.