The chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has disclosed that wealthy Nigerians earning N100 million and above monthly will face a 25 percent personal income tax rate if a new tax bill is passed by the National Assembly.
This revelation was made during a breakout session at the ongoing 30th Nigeria Economic Summit in Abuja on Monday, October 14.
Oyedele emphasised the need to strike a balance between easing the tax burden for lower-income earners and ensuring the wealthy contribute more to government revenue.
“If you earn N100 million a month, we’re taking up to 25 percent from the rich people. That’s because we need to balance the books,” Oyedele stated.
He added that the proposed changes are expected to take effect from January 2025, based on the passage of the bill by lawmakers.
For middle-income earners making N1.5 million or less per month, Oyedele disclosed that their personal income tax obligations would decrease, while those earning higher amounts would see incremental increases in their tax rates, eventually reaching 25 percent. Lower-income earners would be fully exempt from personal income tax.
The reforms also aim to ease the tax burden on businesses.
Oyedele noted: “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 percent on services and assets.”
Additionally, the corporate income tax rate is set to drop from 30 percent to 25 percent which Oyedele described as “huge” for businesses.
Other significant tax adjustments include a reduction or elimination of VAT on essential goods and services such as food, health, education, accommodation, and transportation.
These essential services make up a large portion of household expenditure for the lower-income population, and the proposed reforms aim to lessen their financial burden.
However, Oyedele acknowledged that not all sectors would benefit from reduced tax rates.
For other goods and services, the VAT rate would increase to ensure the government’s revenue book balance.
He also pointed out that inflation had already acted as a “disorderly” tax on the population, eroding the value of their money without the need for legislation.
In addressing concerns over tax incentives and waivers, Oyedele argued that indiscriminate incentives harm the economy and that removing unnecessary incentives 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,” Oyedele concluded.
