The Nigerian Senate has passed two significant tax reform bills: the Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board (Establishment) Bill.
These bills aim to overhaul the nation’s tax administration system by replacing the Federal Inland Revenue Service (FIRS) with the newly established Nigeria Revenue Service (NRS) and creating a Joint Revenue Board to harmonize tax collection across federal, state, and local governments.
Senator Sani Musa, Chairman of the Senate Committee on Finance, emphasized the importance of these reforms in achieving President Bola Tinubu’s vision of expanding Nigeria’s economy to $1 trillion by 2030. He stated, “The tax reform legislation is vital for President Bola Tinubu’s vision of growing Nigeria’s economy to $1 trillion by 2030.”
Senate President Godswill Akpabio praised the progress, expressing confidence that these reforms would improve governance and transform tax collection and distribution nationwide. He assured that the remaining two bills—the Nigeria Tax Administration Bill and the Nigeria Tax Bill—would be concluded the next day, even if it required extended sitting hours.
A notable aspect of the reforms is the retention of the current Value Added Tax (VAT) rate at 7.5%, rejecting a proposed increase to 10%. Additionally, the Senate adopted a new VAT revenue sharing formula, replacing the “derivation” principle with “place of consumption.” Under this formula, VAT revenue is distributed as follows: 10% to the Federal Government, 55% to States and the Federal Capital Territory, and 35% to Local Governments.
The Nigeria Revenue Service will be headed by an Executive Vice Chairman, subject to Senate confirmation, and supported by six Executive Directors representing each of the country’s geopolitical zones. The agency is tasked with assessing corporate taxpayers, reforming tax regimes, and enforcing compliance, including the authority to seize proceeds from tax fraud or evasion.
The Senate’s actions mark a significant step toward modernizing Nigeria’s tax system, aiming to enhance transparency, strengthen institutions, and improve tax compliance and accountability. The remaining two bills are scheduled for consideration and passage on Thursday, May 8, 2025.
