Nigerians earning over ₦100m may pay 25% tax if new bill is passed

Wealthy Nigerians earning ₦100 million and above monthly may soon face a 25 per cent personal income tax rate if a new bill is passed by the National Assembly.

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, disclosed this on Monday during a breakout session at the 30th Nigeria Economic Summit, organised by the Nigerian Economic Summit Group (NESG) and the Ministry of Budget and National Planning in Abuja.

According to Oyedele, the current tax system burdens the wrong individuals with “90 per cent of the current taxpayers being people who should not be taxed.”

He called for a more equitable tax structure, ensuring that the wealthy contribute a fair share of government revenue.

“If you earn ₦100m a month, we are taking up to 25 per cent from the rich people. That’s because we need to balance the books,” he stated.

The proposed tax changes, which are expected to take effect in January 2025, aim to reduce the tax burden on middle-income earners and businesses while ensuring higher earners pay more.

Oyedele said that personal income tax for those earning ₦1.5 million or less monthly would decrease, while higher earners would see incremental increases in their tax rates, eventually reaching 25 per cent. Low-income earners would be exempt from personal income tax altogether.

“People will pay tax once we decide that they have to pay. What we realise is that almost 90 per cent of people who are paying taxes are those who should not have been paying in the first place,” Oyedele said.

He added that 97 per cent of the informal sector should be formally exempted from taxes, noting, “They’re just trying to survive.”

He also argued that inflation had already functioned as an unintentional tax on the population by eroding the value of their money without legislative intervention.

Addressing concerns over tax incentives, Oyedele warned that indiscriminate incentives harm the economy.

He stressed, “We cannot give all the incentives you are asking for. The biggest low-hanging fruit is removing these incentives, and that’s exactly what we are doing.”

The reforms include a reduction of the corporate income tax rate from 30 per cent to 25 per cent. Additionally, VAT on essential goods and services such as food, health, education, accommodation, and transportation would be reduced or removed to ease the financial burden on lower-income households.

However, Oyedele noted that VAT on non-essential goods and services would increase to ensure the government maintains balanced revenue.

He further explained that his committee would leverage primary data identification channels to ensure that the right individuals and entities are brought into the tax net.