Senate commences passage of tax reform bills

The Senate on Wednesday began deliberations on Executive Bills proposed by President Bola Ahmed Tinubu. These include the Joint Revenue Board (Establishment) Bill, 2025; the Nigeria Revenue Service (Establishment) Bill, 2025; the Nigeria Tax Administration Bill, 2025; and the Nigeria Tax Bill, 2025.

Following extensive discussions, the Senate passed the Nigeria Revenue Service (Establishment) Bill and the Nigeria Tax Administration Bill, while deferring deliberations on the remaining two bills to Thursday. Prior to the debate, the Chairman of the Senate Committee on Finance, Senator Sani Musa, presented and submitted his committee’s report.

It was gathered that the House of Representatives had already passed the bills during its plenary in March. One of the key recommendations adopted from Senator Musa’s report was the retention of the current 7.5% Value Added Tax (VAT), in contrast to the proposed increase in the Executive Bills. Lawmakers also upheld the 30% Company Income Tax rate. Senator Musa justified his committee’s stance by explaining that the bill retains the 7.5% VAT rate and allows VAT input on items such as fixed assets, overhead costs, and administrative services.

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A notable change made by the Senate was the adoption of a VAT revenue-sharing formula based on equality, population, and place of consumption. This move aligned with a proposal previously made by the Nigerian Governors’ Forum. The Senate’s adopted version allocated VAT revenue among the federal, state, and local governments and further prescribed how it would be shared within states and local governments.

However, investigations revealed that the Senate’s recommendations did not align with the original provisions of the proposed bills, which had sparked opposition from Northern governors and leaders. The initial proposal from President Tinubu had suggested that 60% of the VAT revenue meant for states and local governments be distributed based on derivation, a clause that triggered concern.

To address the backlash, the Senate adopted a recommendation from the Finance Committee to replace the term “derivation” with “place of consumption,” providing greater clarity and ensuring fairness in the distribution model.

The Senate also repealed the existing Federal Inland Revenue Service Act and replaced it with the Nigeria Revenue Service (Establishment) Bill, 2025, and the Nigeria Tax Administration Bill. These acts aim to regulate the assessment, collection, and accounting of revenue for the federation, states, and local governments, and to define the responsibilities of tax authorities.

In his closing remarks before adjourning plenary, Senate President Godswill Akpabio said the Senate would reconvene on Thursday to complete the passage of the two pending bills.

Deputy Senate President Barau Jibrin commended the Committee on Finance for responding to public concerns, particularly those about the revenue-sharing formula in the Nigeria Tax Administration Bill. He extended special appreciation to the Special Committee led by former Senate Leader Yahaya Abdullahi, whose contributions helped resolve contentious areas in the original bill.

He praised the maturity and unity shown by the Senate in addressing the disagreements and conflicts that initially surrounded the bills. He noted that religious leaders, NGOs, the Nigerian Governors’ Forum, and other stakeholders were now aligned, thanks to the Senate’s inclusive and consultative approach.

NIGERIAN TRIBUNE