After months of deliberation and intense public scrutiny, the Nigerian Senate on Wednesday passed two out of the four Tax Reform Bills transmitted by President Bola Ahmed Tinubu in 2024, marking a significant step in the country’s ongoing fiscal overhaul.

The bills passed include the Nigeria Revenue Service (Establishment) Bill, 2025 and the Nigeria Tax Administration Bill, 2025. The decision followed the presentation of the report by the Senate Committee on Finance, chaired by Senator Mohammed Sani Musa (APC – Niger East), and the adoption of its recommendations during plenary.

The four reform bills originally submitted were:

  1. Joint Revenue Board (Establishment) Bill, 2025

  2. Nigeria Revenue Service (Establishment) Bill, 2025

  3. Nigeria Tax Administration Bill, 2025

  4. Nigeria Tax Bill, 2025

The two remaining bills are expected to be considered later.

Amendments Reflect Stakeholder Engagement

The bills sparked significant public debate upon introduction, especially around the administration of Value Added Tax (VAT). In response, the Senate deferred legislative action and initiated a broad consultative process, involving religious leaders, regional organizations, the Nigerian Governors’ Forum (NGF), and other critical stakeholders.

Based on NGF recommendations, several controversial clauses were amended. The Senate ultimately retained VAT at 7.5% and adopted a revised VAT sharing formula:

  • 10% to the Federal Government

  • 55% to State Governments and the Federal Capital Territory

  • 35% to Local Governments

Further breakdown for revenue distribution:

  • State Governments: 50% (equality), 20% (population), 30% (place of consumption)

  • Local Governments: 70% (equality), 30% (population)

The term “derivation” was replaced with “place of consumption” to ensure clarity and reduce ambiguity.

Key Provisions in the Nigeria Revenue Service Bill

Among other reforms, the bill redefines the Nigeria Revenue Service’s functions to include:

  • Assessing taxable individuals and entities

  • Collaborating with ministries to promote tax-driven economic growth

  • Identifying and recovering proceeds from tax fraud and evasion

Structural changes were also introduced. The President will serve as Chairman of the Board, while an Executive Vice Chairman—subject to Senate confirmation—will lead the Revenue Service. Six Executive Directors will also be appointed, one from each geopolitical zone, ensuring regional representation on a rotational basis.

The bill mandates the Service to submit its annual report within three months after the end of the fiscal year.

Tax Administration Reforms and Penalties

The Nigeria Tax Administration Bill outlines a unified framework for tax collection and distribution at federal, state, and local levels. It also prescribes stiffer penalties for non-compliance, including:

  • Failure to register: ₦100,000 in the first month; ₦50,000 per subsequent month

  • Failure to file returns: ₦200,000 in the first month; ₦50,000 per subsequent month

  • Failure to keep records: ₦10,000 for individuals, ₦100,000 for companies

  • Failure to remit tax: May result in imprisonment of up to three years

Commendations and Outlook

Senate President Godswill Akpabio, who presided over the session, praised lawmakers for their dedication, noting that plenary extended until 5:30 p.m. to ensure the bills were thoroughly considered.

Deputy Senate President Barau Jibrin also lauded the legislative process. “This is the beauty of democracy,” he remarked, commending the Special Committee for its extensive consultations. “Today, we are all on the same pedestal—religious leaders, NGOs, Governors Forum, and the rest.”

The Senate is expected to resume deliberations on the remaining two bills—the Joint Revenue Board (Establishment) Bill, 2025 and the Nigeria Tax Bill, 2025—in the coming days.