The Presidential Fiscal Policy and Tax Reforms Committee has disclosed that a new task regime dedicated to eradicating multiple taxes and making sure that no one is above the law in payment will commence in 2025.
Addressing reporters after the close-out meeting of the committee at the weekend, Taiwo Oyedele, Chairman of the Tax Reforms Committee said the effects of multiple taxation in the country were affecting small businesses.
He said, “We will repeal many of these taxes, harmonise whatever is left, and we think we can keep that within single digit across local government, state and federal government combined, and then improve the efficiency of collecting those taxes.”
He noted that the new system would ensure the informal sector are legally exempted from all taxes; withholding tax, company income tax, even payee on their staff.
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He explained that the federal government believes that the informal sector who are trying to earn legitimate living, should be supported and allowed to grow to a point where they can then have the ability to pay taxes.
The new system, according to Oyedele, aims to provide relief to small businesses that earn N25 million or less annually by exempting them from various taxes that have hindered their progress over time.
“So, we think that 95 per cent of the informal sector should be legally exempt from all taxes: withholding tax, company income tax, and even payee taxes on their staff.”
Speaking on the targeted threshold, Oyedele said, “We’re using data to inform our decisions. Currently, if you earn N25 million a year or less, you don’t have to pay company income tax; you don’t have to worry about VAT.
“We think that the informal sector is people who are trying to earn a legitimate living; we should allow them to be and support them to grow to a point where they can then have the ability to pay taxes,” he said.
Oyedele also mentioned that the proposed reforms will target the top five per cent of the sector, middle class and elite, to pay taxes. He noted that the days of being above the law in paying taxes are over.
The committee, he said, is currently working on drafting laws that will bring about the necessary changes in the country’s fiscal policy and tax reform system.
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