Serrari Group

In a pivotal step to reform Nigeria’s tax system, the Presidential Fiscal Policy and Tax Reforms Committee has recommended establishing the Nigerian Revenue Service (NRS). This centralized agency aims to replace over 100 federal, state, and municipal collection bodies, streamlining tax administration.

President Bola Tinubu appointed Taiwo Oyedele, a partner at PwC Nigeria, to lead this initiative. The committee’s objective is to simplify the tax structure, making it more business-friendly and enhancing compliance.

Nigeria’s tax revenue has dropped to 10.86% of GDP from 19.98% in 2011, well below the African average of 15.6%. To address this, the committee aims to increase tax revenue to 18% of GDP within three years. Key recommendations include reducing the number of taxes from over 60 to just eight and implementing zero-based budgeting for more strategic resource allocation.

Nigeria’s heavy reliance on debt for public spending has limited its investment in infrastructure, with 30% of the 2024 budget dedicated to debt servicing. The proposed reforms aim to reduce this dependency, freeing up funds for essential services.

Initial measures include removing value-added tax on diesel and cutting multiple taxes in the informal sector to lower business costs and stimulate economic activity. The committee also emphasizes combating corruption, prioritizing spending on basic needs, and improving public procurement processes.

The establishment of the Nigerian Revenue Service is expected to streamline tax collection, support economic growth, and enhance Nigeria’s fiscal stability.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

31st May, 2024

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