House of Representatives Passes Landmark Tax Reform Bills
The House of Representatives has passed the third reading of four crucial tax reform bills aimed at overhauling Nigeria’s tax structure. The bills—Nigeria Tax Bill, Tax Administration Bill, Joint Revenue Board Establishment Bill, and Nigeria Revenue Service Bill—scaled the final hurdle during plenary on Tuesday.
The approval follows last Thursday’s adoption of the finance committee’s report on the tax reform bills, marking a significant step toward President Bola Tinubu’s vision of modernizing the nation’s tax system. The president first transmitted the proposed legislation to the National Assembly on October 3, 2024, urging swift passage.
The bills initially faced stiff resistance from northern governors, who feared the reforms could negatively impact their region’s economy. The governors called on lawmakers to reject the proposals, demanding a fairer implementation plan. However, after months of deliberation, the Nigeria Governors’ Forum (NGF) endorsed the bills in January 2025, following an agreement on an “equitable” VAT-sharing formula.
Legislative scrutiny continued, with the Senate passing the bills for a second reading in November 2024, while the House followed suit in February 2025 after extensive debate and a public hearing.
One of the most controversial aspects of the Nigeria Tax Bill was Section 146, which proposed a phased increase in Value Added Tax (VAT) from 7.5% to 12.5% between 2026 and 2029, before rising to 15% by 2030. However, stakeholders, including the Trade Union Congress (TUC), vehemently opposed the hike, arguing it would burden consumers and businesses.
In response, the finance committee scrapped the proposed increase, recommending that VAT remain at 7.5%—a decision ultimately adopted by the House.
On revenue distribution, the original bill proposed a VAT-sharing formula of:
10% for the federal government, 50% for states and the Federal Capital Territory (FCT), 35% for local governments
However, after deliberations, the committee revised the allocation as follows:
10% for the federal government, 55% for states and the FCT, 35% for local governments
