Nigeria’s House of Representatives has approved four tax reform bills proposed by President Bola Tinubu, aimed at strengthening the country’s tax system and boosting government revenue. However, lawmakers made significant adjustments to some provisions to address regional economic concerns and support businesses.

The House rejected the proposed increase in Value-Added Tax (VAT) from 7.5% to 12.5%, citing concerns over the potential impact on businesses and consumers. Additionally, minimum wage earners were exempted from personal income tax to provide relief for low-income workers.

Lawmakers maintained the existing revenue-sharing structure, which allocates 50% of VAT revenue equally among states, 30% based on population, and 20% based on tax contribution. The initial proposal to distribute 60% based on states’ tax contributions and 20% by population was rejected to prevent economic disadvantages for less industrialized northern states.

The approved reforms include revisions to taxation in the petroleum industry to ensure the government increases its revenue while keeping the sector attractive for investors. A global minimum tax was introduced to prevent multinational corporations from shifting profits abroad and to ensure they pay fair taxes in Nigeria. The minimum tax threshold for domestic businesses was also doubled to provide relief for small and medium-sized enterprises (SMEs), encouraging growth and job creation.

The tax reform bills will now proceed to the Senate for further deliberation. Once approved, they will require President Tinubu’s signature to become law. The Senate’s review will be crucial, particularly in determining the final VAT revenue allocation model and assessing the broader economic impact of the reforms. These tax measures are part of Tinubu’s broader economic agenda to increase government revenue, enhance tax efficiency, and promote sustainable economic development across the country.