In a significant setback to President Bola Tinubu’s efforts to boost revenue, Nigerian lawmakers have rejected proposed changes to the country’s consumption and company tax policies. The decision comes amid growing opposition from state governors and concerns over the economic impact of the reforms ¹.
At the heart of the controversy is Tinubu’s plan to gradually double the value-added tax (VAT) rate from 7.5% to 15% over six years. The proposal, which included a revised formula for distributing VAT proceeds among Nigeria’s 36 states, failed to gain traction in the House of Representatives.
Lawmakers also dismissed a proposal to lower the corporate tax rate from 30% to 25% by 2025, a move designed to cushion the effects of the VAT hike on businesses.
Despite these rejections, the government remains committed to overhauling Nigeria’s tax system, which is still governed by some laws dating back to the colonial era. Certain changes have been approved by lawmakers, but both chambers of the National Assembly must vote on them before they can be sent to the president for final approval.
Other proposed reforms still under consideration include:
- Tax exemptions for minimum-wage earners
- Relief of up to ₦500,000 ($460) to help low-income workers manage rent and rising housing costs
The outcome of these debates will have a significant impact on Nigeria’s economic landscape as the government seeks new revenue streams to fund its ambitious fiscal plans ¹.
