The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, on Thursday assured Nigerians that inheritance tax would not be reintroduced in the new tax bills currently being considered by the National Assembly.
Oyedele made this clarification while speaking at the public hearing on the four tax reform bills organized by the House of Representatives Committee on Finance, chaired by Hon. James Faleke.
According to him, “The section of the law being interpreted as introducing inheritance tax is Section 4, Subsection 3 of the Nigerian tax bill. This section refers to family income.
“If an individual owns a property and rents it out, they pay tax on the rent. Similarly, if a family owns a house and rents it out, should they not pay tax? If we exempt them, I guarantee you, all houses in Nigeria will suddenly become family houses, and nobody will pay tax.
“Income is different from inheritance. Inheritance pertains to assets, wealth, and cash. In accounting, income refers to external earnings—it comes from outside the family. This provision is not new; it has been in our tax laws since independence.
“As of today, this provision exists in the Personal Income Tax Act, Section 2, Subsection 5.
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“If a family earns income, they can attribute it to the father or the son, who will then pay the tax. However, if the income cannot be attributed to any specific family member, the tax is imposed on the family as a whole.
“In fact, there is also a tax on villages and communities. For instance, if a community owns a town hall and rents it out, they are required to pay tax. This provision is not new, nor does it introduce an inheritance tax.
“If this provision were equivalent to an inheritance tax, there would have been no need for the military to introduce an actual inheritance tax in 1979.
“In 1996, the Capital Transfer Tax, which imposed inheritance tax, was repealed. Since then, we have not, in any way, directly or indirectly attempted to bring it back. Moreover, this is a state government matter, not a federal government initiative. Why would we want to do that?”
Addressing allegations from some stakeholders in the free zones that 70% of investors had withdrawn their funds due to unfavorable policies, Oyedele dismissed the claim as false.
According to him, “There is what we call ‘cash in circulation,’ which refers to physical currency in people’s pockets and wallets. In Nigeria, this amounts to about four trillion naira, it is meant to be outside the banking system for small transactions like paying for a molue or buying pure water.
“The total money supply in Nigeria exceeds 100 trillion naira, and it remains intact. Last year alone, the value of digital transactions was N1.08 quadrillion. So, nobody is withdrawing money to flee from Nigeria.”
In his submission, the Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji, criticized investors who manufacture in free zones—which have a different tax system but attempt to sell their products in customs areas. He stated that no responsible government would allow such a practice.
According to him, “No responsible government will turn a blind eye and allow individuals who have either not read the law or have only read it halfway to initiate litigation or threaten to leave the country. What is their total investment compared to the damage they claim they can inflict?
“There is no law permitting free zone entities to sell to the customs territory while competing with businesses that pay taxes. That is the fastest way to create economic distortion, and that is not the government’s intention.”
The President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, commended the government for its boldness in introducing the bills but expressed concern over the lack of incentives for manufacturers producing for export.
He also opposed the idea of allowing unrestricted sales into the Export Free Zones, stating that no other country in the world, except Nigeria, permits such a policy. He cited Ghana, which allows only 30% of sales into the local market.
The association proposed that the law should cap the allowable percentage of goods sold into the free zone at 25%.
Meshioye also praised the government for its plan to reduce corporate income tax as outlined in the bills, noting that globally, reducing corporate tax is a common strategy to boost production and economic growth.
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