He also emphasized the need for tax reform, noting that wealthier Nigerians have not been paying their fair share of taxes. Currently, he said, people earning as much as N100 million per month only face a 19% effective tax rate, which the government intends to raise to 25%.
Abuja, Nigeria – Nigerians earning more than N1.5 million monthly will soon face a higher personal income tax rate under the new economic stabilization bill, according to Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
Speaking at the 30th Nigeria Economic Summit in Abuja, Oyedele outlined plans to adjust the tax structure, stating that those earning below N1.5 million will be exempted or see a reduction in their personal income tax (PIT). The tax rate for higher earners will increase progressively, reaching up to 25%.
“If you earn N1.5 million or less in a month, your personal income tax will decrease, and at the lower end, many will be fully exempt. However, if your income exceeds that threshold, your tax rate will increase incrementally up to 25%,” Oyedele said. He also emphasized the need for tax reform, noting that wealthier Nigerians have not been paying their fair share of taxes. Currently, he said, people earning as much as N100 million per month only face a 19% effective tax rate, which the government intends to raise to 25%.
This announcement comes after the Federal Executive Council (FEC) approved a series of economic stabilization bills aimed at amending Nigeria’s tax policies. These bills propose tax reliefs for companies that create jobs and adjustments to personal income tax reliefs for employees earning between N200,000 and N400,000.
Targeting the Right Taxpayers
Oyedele also addressed the ongoing efforts by the federal government to improve tax collection, especially from high-income earners. He revealed that around 90% of those currently paying taxes should not be taxed, particularly low-income earners in the formal sector.
“One of our key focuses is to ensure that the right people pay taxes, particularly those at the higher end of the income scale,” Oyedele explained. “We are developing a system using national identity numbers for individuals and corporate registration numbers for businesses, linking all economic activities to these identifiers. This will ensure transparency in tax reporting.”
He added that the government plans to track transactions automatically and reconcile any discrepancies between declared income and economic activity.
Support for Manufacturers and SMEs
Oyedele also discussed the recently gazetted withholding tax reforms, emphasizing the government’s prioritization of manufacturers and small and medium enterprises (SMEs). He noted that manufacturers would no longer face certain taxes, which he argued would allow them to grow and contribute more to the economy.
“When we withhold income and you’re borrowing at a 35% interest rate, it essentially means you’re funding the government at that rate. How can you grow under such conditions? We’ve also adjusted the VAT for manufacturers to help reduce their costs,” he said.
Additionally, the national assembly is currently reviewing a proposal to increase the value-added tax (VAT) from 7.5% to 10%.
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