The Nigeria Extractive Industries Transparency Initiative (NEITI) has thrown its weight behind the 2024 Tax Reform Bill currently before the National Assembly, describing it as a transformative step toward modernizing Nigeria’s tax system and aligning it with global standards.
However, the agency also flagged areas requiring refinement to ensure the bill’s effective implementation and its full economic potential.
In a memo signed on Tuesday by NEITI’s Executive Secretary, Dr. Orji Ogbonnaya Orji, and addressed to the National Assembly leadership and the Presidential Committee on Fiscal Policy and Tax Reforms, the agency commended the draft legislation for its innovative provisions, which include taxing digital assets, addressing resident and non-resident taxation, curbing tax evasion, and consolidating legal frameworks for transparency and efficiency.
“This bill, if enacted, has the potential to streamline and broaden Nigeria’s tax administration and base, aligning it with global best practices,” Dr. Orji stated. NEITI emphasized that the proposed reforms demonstrate extensive research and consultation, underscoring a commitment to fiscal transparency.
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NEITI highlighted that the bill’s provisions could positively impact revenue generation, job creation, and economic opportunities. With Nigeria’s tax-to-GDP ratio at a meager 6%, compared to the global average of 15-20%, the reforms aim to widen the tax net by addressing loopholes and ensuring compliance. For instance, the inclusion of digital asset taxation is a progressive move, especially given the growing volume of online transactions in Nigeria, which exceeded $8 billion in 2023.
Additionally, the unification of tax administration into a single framework could simplify compliance for businesses, boost investor confidence, and reduce administrative bottlenecks. However, NEITI warned that mismanaging the transition process or failing to harmonize federal and state tax laws could create confusion and discourage investments.
However, for many Nigerians, the question remains: Will this reform address systemic inefficiencies or become another bureaucratic burden?
NEITI’s detailed review identified gaps in the bill, particularly in sections dealing with the roles of subnational governments. “Sections 1 and 2, which aim to ensure unified tax legislation across Nigeria, lack explicit guidelines to harmonize federal and state tax laws or clarify the roles of subnational governments,” the agency noted.
While commending the intent to repeal existing Acts and consolidate them, NEITI stressed the importance of managing the transition process carefully. Robust public awareness campaigns, clear communication, and targeted engagement with stakeholders—particularly in the extractive industries—are critical to building trust and avoiding administrative confusion.
NEITI also called for greater clarity in implementation strategies, especially for industries under its specific mandate. The extractive sector, which accounts for a significant portion of Nigeria’s foreign earnings, faces unique challenges that require tailored solutions within the broader framework of the reforms.
The 2024 Tax Reform Bill represents a bold effort to modernize Nigeria’s tax system, enhance fiscal transparency, and unlock economic opportunities. However, its success will depend on bridging the gaps identified by NEITI, fostering collaboration between federal and state governments, and ensuring that the reforms are not just comprehensive on paper but practical in execution.
For Nigeria, a country grappling with dwindling oil revenues and a widening fiscal deficit, these reforms could be a turning point—if managed with precision and inclusivity.