The federal government has disclosed plans to reduce corporate income taxes from 30 percent to 25 percent in a bid to lessen the taxation burden on corporate organizations.
Additionally, the government announced that it has commenced the process to raise the personal income tax for high-income individuals—those earning up to N100 million monthly—to 25 percent.
Individuals earning from N1.5 million will now pay 19 percent in income tax, while those earning below N1 million monthly will be exempt from the personal income tax regime.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, made these disclosures on Monday at the 30th Nigerian Economic Summit in Abuja, themed “Collaborative Action for Growth, Competitiveness and Stability.”
He indicated that the executive arm of government has initiated an Executive Bill to the National Assembly for passage into law, with the new tax reforms expected to take effect from January 2025.
“We just need to figure out who is bearing the burden, it might be shareholders, might be employees, might be the ordinary man on the street,” Oyedele told a plenary session at the ongoing summit. “So we have been very intentional in reducing the tax burden of businesses. One of it is, today whatever VAT you pay on assets, whether you are building a factory or buying a laptop, on buying vehicles, you bear IT. As a business, of course, it increases your cost and therefore your pricing will go up. Once our reforms are implemented, you get the credit back 100% on services and on assets.”
He added, “Your corporate income tax rate will come down from 30% to 25%, that’s also huge.”
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On personal income tax, Oyedele explained the new structure, stating, “So and then we also have personal income plans as what we model is that, many people in this room do not like this one, because there are rich people in the room. If you earn 1.5 million naira in a month or less, your personal income tax bill will go down, of course, at lower end, completely exempted. But if you earn more than that amount, you see it going up incrementally, up to 25%.”
He further stated, “Today, if you earn N100 million a month, effective personal income tax rate. We’re taking that up to 25% for the rich people, but that’s because we need to balance the book.”
In reforming the tax process, the government classified all taxes on businesses, including direct taxes, as indirect taxes.
Oyedele emphasized that the government intends to significantly reduce or remove taxes on food, other household items, health, education, accommodation, and transportation—expenses that cost Nigerians about 82 percent of their total expenditures.
“The government was not going to make Nigerians pay more taxes, increase the rate and not introduce new ones,” he stated.
Describing the Nigerian tax system as progressing, Oyedele did not assure taxpayers of the demanded incentives. “We actually think that the biggest low hanging fruit is removing its incentives. The good thing about it is, it would not cost government its money but it would be a huge relief for the business sector, and that’s exactly what we are doing,” he added.
