By Nathaniel Zacchaeus, Abuja
The Senate has passed two tax reform legislations: the Nigeria Revenue Service (Establishment) Bill 2025 and the Nigeria Tax Administration Bill 2025.
This followed the presentation and consideration of its Committee on Finance report, chaired by Senator Sani Musa.
After considering the two bills clause by clause, the Red Chamber retains the 7.5% value-added tax (VAT) that the Federal Government collects from consumer goods and services.
The Red Chambers approved that the Federal Government should be entitled to 10 per cent of the total revenue collected as taxes. In comparison, the states and local governments get 55 per cent and local governments, 35 per cent, respectively.
The proposed legislation defined derivation as a place of consumption of products and services.
It clarified that states where any product is consumed would benefit from the VAT collected on such an item.
Apart from this, the Senate approved the establishment of the Tax Appeal Tribunal.
It approved renaming the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS).
Similarly, it approved the constitution of the board of directors for the proposed NRS, with a non-executive Chairman heading the agency’s board. At the same time, the Chief Executive Officer would be addressed as the Executive Vice Chairman.
The Senate also approved a two-per cent cost of production for the proposed NRS using funds collected from the oil and non-oil sectors.
It explained that the Tax Appeal Tribunal shall be funded through the Consolidated Revenue Fund, as may be appropriated by the National Assembly, to execute its functions under the Act.
It provided a more transparent, structured, and professional qualification standard for Tax Appeal Commissioners, promoting efficiency and credibility in tax dispute resolution.
The Bill expanded the Tribunal’s jurisdiction to cover all Federal and State Tax Laws and amended it to restrict it only to tax disputes and not controversies.
It said, “The Tax Appeal Commissioners shall be paid salaries and allowances to be determined by the Revenue Mobilisation Allocation and Fiscal Commission. This is done to provide for emoluments.”
The Senate approved the establishment of the Office of the Tax Ombud, which shall be funded from the Consolidated Revenue Fund, as may be appropriated by the National Assembly.
The Senate rejected the recommendation of the Finance Committee which states that, “Except as otherwise provided under this Act, any other law or any enabling agreement or arrangement or as otherwise authorised by the Board or the Executive Secretary, any person who discloses Institutional information, communication, document or internal conviction, to a fine of N5,000,000.00.”
The Red Chamber deleted the clause, saying it was draconian, autocratic, obnoxious, and self-serving.
Justifying the establishment of the NRS, the Senate agreed with its committee to “provide for a legal, institutional and regulatory framework for the administration of taxes and revenue accruable to the Government of the Federation, as prescribed by the National Assembly.”
The Bill said the NRS would assess persons, including corporations, companies, and individuals chargeable with tax, other than individuals, who are residents in any state of the Federation or the Federal Capital Territory.
The Bill empowers the NRS to review the tax regimes in collaboration with the relevant Ministries and Agencies of Government, subject to the approval of the Senate, and promote the use of taxation to develop, stimulate, and grow economic activities.
In accordance with the provisions of this Bill, it will adopt measures to identify, trace, freeze, confiscate, or seize proceeds derived from tax fraud or evasion.
It added, “The President shall appoint the Chairman of the Board; and (b) Executive Vice Chairman shall be the head of the Revenue Service and subject to confirmation of the Senate.
“The Secretary shall be a lawyer, or a chartered accountant or a chartered secretary who shall not be less than the rank of a Deputy Director.
Executive directors should be appointed to the Service’s board. We propose amending the relevant clause as follows.
“The President shall appoint six Executive Directors for the Service, each representing a geopolitical zone on a rotational basis among the states in the zone alphabetically, provided that the Executive Vice Chairman and an Executive Director shall not come from the same state.
“The timeline for reporting by the Service should not exceed three months after the end of the preceding year. The amount of VAT revenue standing to the credit of states and local governments shall be distributed among them on the following basis: State Governments: Equality – 50%;
Population: 20%; Place of consumption: 30%; Local Governments: 70%; Equality: 30%. To provide clarity, change the word “Derivative” to “place of consumption.”
“Penalties for the following offences were amended as follows: Clause 100 – Failure to register: (a) N100,000 in the first month in which the failure occurs; and (b) N50,000 for each subsequent month in which the failure continues.
Clause 101 – Failure to file returns: (a) N200,000 in the first month in which the failure occurs, and (b) N50,000.00 for each subsequent month in which the failure continues
Clause 102 – Failure to keep books: (b) on request by the relevant tax authority, fails to provide any record or book.
“Prescribed in this Act shall be liable to pay an administrative penalty of in the case of a person other than a company, N10,000, and in the case of a company, NI00,000.
“Clause 107 – Failure to remit tax deducted at source or self-account: A person who fails to comply with subsections (1) and (2), shall on conviction for any of the offences under this section, in addition to the administrative penalty, be liable to a term of imprisonment not exceeding three years.
“Development Levy: Retain the funding of TETFUND, NASENI, NITDA, Cyber Security and NELFUND from the Development levy using the following sharing formula: Tertiary Education Trust Fund 50 per cent; Nigerian Education Loan Fund 15 per cent; National Information Technology Development Fund – 10 per cent; and the National Agency for Science and Engineering Infrastructure 10 per cent.
Others are the National Cybersecurity Funds – 5 per cent, and the Defence Security Funds – 10 per cent. Retain the VAT rate at 7.5 per cent and the Company Income Tax rate 30 per cent.”
