The Federal Government is planning to introduce a 25% personal income tax on Nigerians earning over N100 million annually, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee. The proposal is part of a broader tax reform initiative aimed at ensuring the wealthy contribute more to national revenue.
Speaking during a session at the 30th Nigerian Economic Summit in Abuja, Oyedele revealed that the tax reforms, if passed by the National Assembly, would take effect in January 2025. He highlighted the need to alleviate the tax burden on lower-income earners while increasing taxes on higher-income individuals.
“We are taking up to 25% from those who earn N100 million a month to balance the books,” Oyedele stated, emphasizing the government’s focus on targeting the right taxpayers.
Fairer Tax System for Lower Earners
In contrast, middle-income earners, particularly those making N1.5 million or less per month, would see a reduction in their personal income tax rates. Lower-income individuals would be exempt from paying personal income tax altogether under the new framework.
Oyedele also pointed out that 90% of the current taxpayers are individuals who should not be paying taxes in the first place. “Almost 97% of the informal sector should be exempt from taxes,” he said, noting that many Nigerians struggling to make ends meet are wrongly included in the tax bracket.
Corporate Tax Relief and VAT Adjustments
The proposed tax reforms extend beyond personal income taxes. Oyedele mentioned that the corporate income tax rate is set to drop from 30% to 25%, a move he described as significant for businesses. In addition, the reforms would eliminate or reduce VAT on essential goods and services such as food, healthcare, education, housing, and transportation. These changes aim to reduce financial pressure on lower-income households.
However, not all sectors will benefit from reduced tax rates. VAT on other goods and services would increase to ensure the government maintains its revenue targets.
Curbing Indiscriminate Tax Incentives
Oyedele also addressed the issue of tax incentives, arguing that indiscriminate incentives harm the economy. He emphasized the importance of removing unnecessary tax waivers to improve business efficiency without sacrificing government revenue.
As Nigeria navigates its economic challenges, these proposed tax reforms are expected to create a more balanced and equitable system, ensuring the wealthiest contribute more while easing the burden on lower-income earners and businesses.
