The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, disclosed that the country currently spends less than 50 per cent of its revenue on debt servicing.\n<\/p>\n
While serving as the keynote speaker at PwC\u2019s Executive Summit on Nigeria\u2019s Tax Reform, with the theme \u201cThe New Tax Era: What Nigeria\u2019s Tax Reform Means to Individuals and Businesses\u201d, in Lagos on Monday, Oyedele explained that the government was spending almost 97 per cent of its revenue on debt servicing before the economic reforms.\n<\/p>\n
\u201cWe\u2019ve cleared unmet forex futures that were more than $7bn. And we move from under $4 bn external reserve to over $20bn today. Budget deficit is declining, and we\u2019re spending more on infrastructure.\n<\/p>\n
\u201cTax to GDP ratio moved from under 10 per cent is now 13.5 per cent in two years. Instead of 97 per cent, service debt is now under 50 per cent in two years. We no longer print money to spend. Rather, we\u2019ve paid down part of the ways and means that the previous administration printed,\u201d he stated.<\/p>\n
He explained that the country\u2019s currency could have become worthless if the Federal Government had not embarked on the current economic reforms.\n<\/p>\n
He noted that the country was heading in the direction of Zimbabwe and Venezuela, whose economies had collapsed.\n<\/p>\n
\u201cNigeria today, without reforms, would have looked like that. Bigger deficits, more naira printed. We will have easily over $10bn unmet forwards. Tax to GDP ratio will be less than 10 per cent. We\u2019ll be spending over 100 per cent of our revenue to service debts. You hold money; you will not find PMS to buy. There\u2019ll be more poverty, and there will be more ways and means.<\/p>\n
\u201cI thought to bring the currency. I\u2019ll show you. So, this currency, this banknote in my hand, is 100 trillion Zimbabwean dollars. I\u2019m not 100 trillion one notes. This note, at the time I got it, was barely enough to buy a loaf of bread. I gave my friend, whom I got this from, $10 and he is still grateful till tomorrow. This is what would have happened to Nigeria. Nigeria was the road to Venezuela and Zimbabwe.\u201d\n<\/p>\n
According to the FPTRC chair, the country could have reached a $1bn economy by now if the government had begun the ongoing economic reforms a decade ago.\n<\/p>\n
\u201cIf some of these reforms that were done in the past two years had been done 10 years ago. I tell you authoritatively today, Nigeria will be a $1bn economy guaranteed. And the price of PMS will be under N300\/litre because the exchange rate will be under N300 to the USD.\n<\/p>\n
\u201cWe\u2019ve done this analysis over the past 10 years. Comparable balance of payment between Nigeria, Kenya and South Africa. Yet naira has lost six and a half times more value than Kenya shillings and South African rand. If only we had maintained the same level of stability as those two other countries. Nigeria will be a $1tn economy. What that means is the size of the middle class will probably be 10 times what it is. Every single investor in the world will take a seriously enough about,\u201d Oyedele asserted.\n<\/p>\n
He argued that the government was wasting trillions of naira subsidising petrol, spending a large chunk of its revenue to service debt and was just printing naira at will.\n<\/p>\n
\u201cWe committed them to subsidise PMS. It still wasn\u2019t enough. NNPC took the taxes they were supposed to pay and they used that as well. It was not enough. They started taking the taxes of the other operators in the industry to also pay for the PMS. It still wasn\u2019t enough. If we had continued till this day, the subsidy regime would have collapsed.\n<\/p>\n
\u201cNaturally, you would hold N100,000; you will not find a litre of PMS to buy. And I said that with all sense of responsibility. Responsibility because we\u2019re running out of fiscal space to deal with the subsidy.<\/p>\n
\u201cMany people like you, including myself, knew there was a lot of corruption in it. That\u2019s true. Could we have removed the corruption in the time frame? No. We had a huge budget deficit. We printed over N30tn to spend. We\u2019re not building roads. It wasn\u2019t that we\u2019re building electricity. We were paying salaries,\u201d he emphasised. <\/p>\n
Oyedele disclosed that only three per cent of informal sector operators could pay taxes in Nigeria.\n<\/p>\n
He explained, \u201cFrom our analysis, it is only the top three per cent of the informal sector that has the ability to pay. Therefore, in these reforms, we have legally exempted the bottom 97 per cent from paying taxes. Let them breathe. When they grow, they will have the capacity to pay. And many people would ask me, \u2018Are you sure that all the companies in Nigeria will not become small?\u2019.\n<\/p>\n
\u201cThis will happen anywhere in the world if you create an exemption threshold. People want to force themselves to be under the threshold. Isn\u2019t it because they don\u2019t want to pay tax? It\u2019s hard to pay tax anywhere in the world. Nigerians are not bad people. They\u2019re not worse than people who live in other countries where things work. The difference is the system. So, the system we are building is that if you like to go and lie and say your business is small when it is not, we will find out, and there shall be consequences for those who underdeclare and engage in tax evasion.\u201d\n<\/p>\n
According to the FPTRC chair, the country\u2019s tax is now progressive, and all the major taxes have become progressive.\n<\/p>\n
Oyedele also disclosed that the gazette of the recently signed tax law was being printed in Lagos, and the final copy of the tax would be released to the public afterwards.\n<\/p>\n
Recall that President Bola Tinubu signed four bills into law on June 26, but they would become effective on January 1, 2026.<\/p>\n
Also, the Regional Senior Partner, PwC West Market Area, Sam Abu, noted that the reforms embarked on by the government were a good starting point for engaging in that conversation very robustly.\n<\/p>\n
\u201cPolicy alone won\u2019t deliver. Real change requires partnership and commitment. It required every single one of us here, the government, business leaders, and private sector individuals, to collaborate and work together to shape what will come up, to shape the kind of society and the kind of business community that we want to operate together, that we want to believe is okay. It requires us to engage with the spirit of these reforms, with sincerity, with integrity and with optimism,\u201d he emphasised.\n<\/p>\n
He said perspectives of stakeholders were critical in ensuring that those reforms take root and deliver on the outcomes that had been promised.\n<\/p>\n
\u201cEverybody has had a part to play in this regard. So, a PWC objective is clear. We want to remove complexity from tax. We want to help our clients anticipate risk and deliver solutions that are practical and tailored to their businesses, so that you, as business leaders, can focus on what you do best, which is making an impact on growing your businesses,\u201d Abu added.\n<\/p>\n
Major highlights of the new tax law are the exemption of employees who earn less than N800,000 annually from the personal income tax, the harmonisation of federal taxes and making the Federal Inland Revenue Service the sole collector of federal taxes.\n<\/p>\n
Meanwhile, Partner and Tax and Regulatory Service Leader, Chijioke Uwaegbute, added that with the new tax law, by January 1, 2026, an entity that is resident abroad will be fully taxed in Nigeria if it is being controlled from the country.\n<\/p>\n
\u201cControl meaning where the board sits and things like that, or it is being effectively managed in Nigeria, being where the people who make the decisions sit. That is potentially a big one.<\/p>\n
\u201cSimilarly, we have rules around indirect transfers as well. I have a situation where you dispose of or there\u2019s a disposal of the shares of a foreign entity that owns a Nigerian company.\u00a0 And if that disposal means that there\u2019s a change in the ownership of the Nigerian company, that disposal then is seen as a taxable event in Nigeria, not minding the fact that the shares that were disposed of are not of the Nigerian company.\n<\/p>\n
\u201cSo all of these rules that we see here are really to reflect some of the advances we\u2019ve seen in other countries, minimise opportunities for avoidance and ensure that Nigeria is able to tax its fair share of taxes,\u201d he said while highlighting major changes in the new tax law.\n <\/p>\n","protected":false},"excerpt":{"rendered":"The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, disclosed that the country…\n","protected":false},"author":2,"featured_media":28517,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-28516","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/28516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=28516"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/28516\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/28517"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=28516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=28516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=28516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}