Israel Umoh
Akwa Ibom Internal Revenue Service (AKIRS), has clarified the economic and social implications of Nigeria Tax Reforms to different sectors in the country.
The Executive Chairman of AKIRS, Sir Okon Okon stated that the reforms will protect low-income earners and reduces inequality for individuals earning ₦1 million/year, lower PAYE for ₦1.7million/month incomes; cause higher earners to pay up to 25 per cent more and ensure fairness through progressive taxation.
Making this known during an engagement with journalists in Uyo, the Executive Chairman of Akwa Inbom Internal Revenue Service (AKIRS), Sir Okon Okon who spoke on the title: On the Nigeria Tax Reforms: Synopsis of the Implications.
The reforms, according to him, will improve fairness and transparency for National Tax Identification Number, 0% Value Added Tax (VAT) on food, healthcare, education, rent, transport to reduce cost-of-living pressures, VAT exemption for transport, CNG, renewable energy, sanitary pads, fuel to encourage sustainable living and gender welfare.
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‘‘Tax Clearance Certificate (TCC) issuance within 2 weeks to boost trust and reduce delays, Rent ₦10 million exempt from stamp duty to support affordable housing, no Capital Gains Tax (CGT) on sale of personal dwelling, vehicles, chattels ₦5 million to protect personal assets, PAYE exemption for lower-rank armed forces to support security personnel.
‘‘Clear rules for digital asset taxation will encourage digital economy growth, Rent Relief Allowance has replaced Consolidated Relief Allowance (replacing CRA) of up to ₦500k or 20% of rent; other savings, health & home-ownership incentives to strengthen social welfare foundation.
The AKIRS boss said the tax reform exempts individuals earning ₦1m/year to protect low-income earners and reduce inequality, provides for lower PAYE for incomes ₦1.7million/month; higher earners pay up to 25% more to ensure fairness through progressive Taxation, provides for National Tax Identification Number to Improve fairness and transparency and 0% VAT on food, healthcare, education, rent, transport to reduce cost-of-living pressures.
Other provisions are VAT exemption for transport, CNG, renewable energy, sanitary pads, fuel to encourage sustainable living and gender welfare; TCC issuance within two weeks to boost trust and reduces delays; and rent ₦10 million exempt from stamp duty to support affordable housing.
‘‘No CGT on sale of personal dwelling, vehicles, chattels ₦5 million to protect personal assets, PAYE exemption for lower-rank armed forces to support security personnel, clear rules for digital asset taxation to encourage digital economy growth, Rent Relief Allowance (replacing CRA) Up to ₦500k or 20% of rent, and other savings, health & home-ownership incentives to strengthen social welfare foundation.”
On implications of the reforms for small businesses, he listed 0% CIT for firms with turnover ₦100 million and assets ₦250 million, reduced CIT to 25% (effective date to be set by President), No WHT on supplier payments (except no TIN or monthly supply > ₦2 million), Minimum tax eliminated for loss-making firms, TCC required only for MDA/bank transactions and tax breaks for wage awards & transport subsidies to low-income staff.
‘‘Incentives for employers with 3-year hiring growth, input VAT now claimable on both services and assets, No CGT on mergers, reorganizations, restructurings, CGT applies only on net gains after losses, Exemption for disposals < ₦150 million or gains ₦10 million, Office of the Tax Ombud created, Presumptive tax regime introduced for the informal sector, and National Tax Identification Number mandated.
Speaking on Economic & Operational Impact, he said the tax reform frees capital for expansion and job creation, smooth transition from small to medium scale, improves cash flow and reduces administrative bottlenecks, protects struggling firms, promotes recovery, encourages staff welfare and employment growth, enhances liquidity with faster VAT recovery, promotes consolidation without tax penalties and builds trust through Ombud oversight.
For Companies & Investments, he outlined the benefits to include CGT exemption for retail investors, pension funds, REITs, M&A, security lending; Capital losses deductible; No WHT on bonus shares; Stamp duty exemption on documents for stocks/shares transfers; Lower business costs via input VAT credits; CIT reduction from 30% → 25%; Harmonization of levies (TET, NITDA, NASENI, etc) and Repeal of 60+ taxes/levies down to < 10; moderation of excessive agency fees via Tax Ombud; and tax exemption for state government bonds.
‘‘Personal Income Tax exemption or final WHT on fixed income securities, lower WHT or exemptions to ease cash-flow pressures, final WHT on foreign investors’ dividends and interest, TIN exemption for foreign investors; Export Processing Zones; entities fully exempt if ≥ 75% of sales are exports; If 25% sales made locally, tax applies to local sales.’’
According to him, ‘‘From 1 January 2028, full taxation applies on all local-territory sales, Share Disposal, flat 10% CGT replaced by 0–30% progressive tax, disposals up to ₦150 million with gains ₦10 million exempt; and gains exempt if proceeds are reinvested in same year.
Commenting on implications for Sub-Nationals (States & LGAs), the South South Commissioner stated that VAT formula was revised from 50% to 55% for States, distribution: Equity 50% | Population 20% | Derivation 30%, strengthened revenue administration and professionalism, improved compliance through Tax ID, Stamp Duties on individuals now belong fully to states, and tax harmonization eliminating multiple taxation.
‘‘States empowered to collect taxes for LGAs, consumption Tax abolished, full digitalization: e-invoicing, e-payments, no cash handling, better business environment and protection for SMEs, states administer virtual currency taxes, focus on High-Net-Worth Individuals (HNWIs), National Tax Identification Number (NTIN) for all taxpayers.’’
On implications for the Nation, Okon said it would consolidate major tax laws into a unified framework, facilitate more progressive tax system that protects the poor and boosts equity, enhanced higher tax-to-GDP ratio and reduced dependence on oil, better environment for investment and business growth, remove wasteful levies and reduction of leakages, sustain stronger accountability via the Nigeria Revenue Service, improved tax refunds, better national data, and stronger fiscal planning. As well as harmonized national taxpayer identification.
The State Commissioner for Information, Dr. Aniekan Umanah called on journalists to join in the campaign to sensitise the masses on the Nigeria Tax Reforms.
Umanah assured that Governor Umo Eno’s administration would put everything in place to facilitate the smooth take off of the reforms next years, calling on the people to throw their weight behind it to benefit for the tax net.
