How Tax Reform Bills will address inflation, curb illicit funds in Nigeria – Oyedele 

The Tax Reform Bills currently under consideration in the National Assembly will address some key Nigeria’s economic challenges, including inflation and illicit financial flows.

This was made known by Taiwo Oyedele, the Chairman of the Presidential Tax Reform and Fiscal Policy Committee, during a ThePressNG Twitter Space titled “Tax Reform Bills: Clarifying the Sticky Issues with Taiwo Oyedele” on Monday.

In response to a question from the CEO of ThePressNG, Mr Ugo Obi-Chukwu how the bills incorporate mechanisms to address inflation, Oyedele stated, “We have this [measure to address inflation] in the bill. We don’t have it everywhere. It’s something we debated a lot. We were struggling with what reference point we could include in the law. So, for some of those… we’ve put multiples of the national minimum wage something that says you shouldn’t pay more than N5 million or 5 times the national minimum wage. So, if you don’t change that law, you know that every five years you fight for a new minimum wage. So, that reflects the inflation within the environment. We didn’t want to reference our laws to US dollars.” 

He also emphasized the importance of anchoring tax laws to local economic realities rather than foreign currencies like the U.S. dollar, a move designed to create a more resilient and adaptive tax structure.

Oyedele noted that the tax reform initiative prioritizes improving compliance, which is currently low in Nigeria.

“That’s what we call tax buoyancy. At this stage of the reform, we expect tax revenue to grow faster than GDP, even after the rebasing we’re planning for 2025. Over time, as compliance reaches global standards, tax revenue growth should align with GDP growth.” 

The committee has set a target of achieving an 18% tax-to-GDP ratio within two to three years, a significant leap from current levels. However, Oyedele stressed that this goal would not involve imposing higher taxes but improving efficiency and compliance within the system.

One of the most significant provisions of the tax reform bills is the focus on taxing illicit funds.

Oyedele explained, “We have provisions in those bills all over the place. Without saying it directly that tells you that you have to pay tax regardless of the source of the income. And once we find that you have revenue including from international data we’re going to be receiving and you can’t explain it, you have to pay the tax.” 

Commenting further, he said “In 2025, we plan to do a voluntary disclosure programme where we will give the people the opportunity to self-declare before we now come down on them because this time around there’s going to be data. And it’s not a joke. We’re going to write to you and tell you how much you have; the number of bank accounts; the money you have in investment account, asset management,and stocks. I don’t want to scare anybody. We think this will also help fight corruption.” 

What you should know 

In October 2024, President Bola Tinubu submitted the tax reform bills to the National Assembly, following the completion and presentation of the committee’s report led by Taiwo Oyedele.