The administration of President Bola Tinubu has introduced a new tax initiative that allows Nigerians to pay their taxes in instalments, according to the Nigeria Tax Bill 2024, recently submitted to the National Assembly for review. This proposal aims to ease the tax burden on individuals by permitting payments in either a lump sum or in instalments, provided all payments are made before the filing deadline.
A notable feature of the bill is the establishment of a dedicated account by the Accountant-General of the Federation for tax refunds. This account is intended to streamline the process of refunding taxpayers who have overpaid or are entitled to recover certain amounts following tax assessments.
The proposed legislation comes alongside broader tax reforms initiated by the government to boost revenue collection. Last week, the government introduced four new bills to the National Assembly, designed to create legislative frameworks for reforms recommended by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele. These reforms aim to improve efficiency in collecting direct taxes and levies.
As part of these reforms, the Nigeria Revenue Service will be established to centralize revenue collection duties, stripping entities such as the Nigerian Customs Service and Nigerian Ports Authority, among 60 other agencies, of these responsibilities. Additionally, the bill proposes the creation of a tax tribunal and an ombudsman to oversee and resolve tax-related disputes.
Section 48 of the Nigeria Tax Bill 2024 outlines the instalment payment option, stating that taxes can be paid in equal monthly instalments, with the final instalment due by the tax filing deadline. The bill mandates that instalment payments begin no later than the third month of the accounting period and continue monthly until the full tax amount is paid.
Furthermore, the bill details provisions for tax refunds, requiring that any overpayments be refunded within 90 days of a tax authority’s decision, with the option to apply the refund to any outstanding tax liabilities. A dedicated account for tax refunds will be established and managed by the relevant tax authority.
The proposed bill also adjusts the distribution of value-added tax (VAT) revenue, allocating 10% to the Federal Government, 55% to State Governments and the Federal Capital Territory (FCT), and 35% to Local Governments. Of the amounts allocated to states and local governments, 60% will be distributed based on derivation.
These proposed reforms are designed to simplify the tax payment process, promote transparency, and improve overall efficiency in Nigeria’s tax system.
Discussion about this post