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Federal Government plans Single-Digit Tax System to Ease Burden on Citizens, Businesses

November 12, 2024

The Nigerian federal government is set to introduce a single-digit tax system aimed at reducing the financial burden on citizens and businesses caused by multiple taxes.

This reform plan, as explained by Taiwo Oyedele, chairman of the Presidential Committee on Fiscal and Tax Reforms, seeks to streamline the tax structure by consolidating various taxes into fewer, simpler levies as the goal is to lower the number of taxes to single digits, with reforms expected to benefit both businesses and individuals by making tax compliance easier and more efficient.

Meanwhile, he emphasized that the committee has put a framework in place to foster cooperation between tax authorities and states, focusing on improving data sharing, tax intelligence, and capacity building.

Furthermore, he also highlighted the importance of improving the country’s tax system, which he described as one of the most outdated in the world.  Additionally, the government hopes to address the issue of tax evasion, create a level playing field for compliant taxpayers by using technology to improve tax collection and ensure a more equitable and efficient tax system

The government’s broader objective is to simplify the tax system while ensuring that sufficient revenue is generated to support the nation’s economy. This will be achieved through tax harmonization, which aims to reduce disincentives to business formalization and enhance the use of technology and data in tax administration.

In addition to the single-digit tax regime, the government plans to introduce a reduction in the corporate income tax rate from 30% to 25% over the next two years. This will be accompanied by the elimination of earmarked taxes on companies, which will be replaced with a harmonized, single levy at a reduced rate. Oyedele further stressed that the reforms would benefit businesses of all sizes, fostering economic growth and investment while maintaining the capacity to generate sufficient revenue for the government.

Overall, the tax reforms are part of a broader effort to revamp Nigeria’s tax system, making it more modern, transparent, and business-friendly. The administration is working closely with legislators to ensure the passage of necessary bills and the continued progress of the reforms. The ultimate aim is to reduce the overall tax burden on Nigerians without compromising the revenue needed to support national development.

Written by Adeyemi Adewale




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