Wealthy Nigerians earning ₦100 million and above monthly may soon face a 25% personal income tax rate if a new tax bill is passed by the National Assembly.
This announcement was made by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, during a breakout session at the 30th Nigeria Economic Summit in Abuja on Monday.
Oyedele stated that 90% of current taxpayers are individuals who should not be taxed and advocated for a more streamlined and equitable tax system.
“If you earn ₦100 million a month, we are taking up to 25% from the rich people. That’s because we need to balance the books,” he said.
The proposed changes are expected to take effect from January 2025, pending legislative approval. Oyedele emphasized the government’s determination to ensure that the right individuals pay taxes, noting that the reforms also aim to ease the tax burden on businesses.
For middle-income earners making ₦1.5 million or less per month, personal income tax obligations would decrease, while higher earners would see incremental increases, ultimately reaching the 25% rate. Lower-income earners would be fully exempt from personal income tax.
“Today, whatever VAT you (businesses) pay on assets—whether you’re building a factory, buying a laptop, or vehicles—you bear it. This increases your cost, and therefore, your pricing will go up. Once our reforms are implemented, you get the credit back 100% on services and assets,” Oyedele explained.
He also highlighted that nearly 90% of current taxpayers should not be in that position. “What we realize is that almost 90% of people who are paying taxes are those who should not have been paying in the first place,” he added.
He stressed that 97% of the informal sector should be exempted from taxes, as many individuals are simply trying to survive.
Oyedele acknowledged that inflation has already acted as a “disorderly” tax on the population, eroding the value of their money without new legislation.
Regarding tax incentives, he argued that indiscriminate incentives harm the economy and that removing unnecessary ones could relieve the business sector without costing the government revenue. “We cannot give all the incentives you are asking for. We think the biggest low-hanging fruit is removing these incentives, and that’s exactly what we are doing,” he stated.
Additionally, the corporate income tax rate is set to drop from 30% to 25%, which Oyedele described as “huge” for businesses. Significant tax adjustments are also planned, including a reduction or elimination of VAT on essential goods and services such as food, health, education, accommodation, and transportation.
However, he acknowledged that not all sectors would benefit from reduced tax rates. For other goods and services, the VAT rate would increase to maintain government revenue.
READ ALSO: FG Slashes Corporate Taxes, Raises Income Tax To 25%
Oyedele explained that his committee will use primary data identification channels to ensure that the appropriate group of taxpayers is brought into the tax bracket.
Meanwhile, Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), reassured Nigerians that the proposed tax reform laws would not introduce new taxes or increase existing ones.
“The reforms essentially seek to increase the simplicity, efficiency of tax administration and obliterate the multiplicity of taxes,” Adedeji said during an appearance before the Senate Committee on Finance.
While some lawmakers expressed concerns regarding the bills, Adedeji emphasized that the reforms would drive efficiency, simplify tax laws, and promote transparency in revenue collection.
The Senate plans to convene another meeting with the FIRS before a scheduled public hearing on the matter.
