House of Reps reviews Federal Tax Law, to use ICT, other digital means for tax collection in Nigeria

The House of Representatives (HoR) in the revised legislative agenda document pledged that it will conduct a review of all federal tax laws in the country through the use of Information Communication Technology (ICT) to encourage more investment and curb tax evasion.

Currently, there are over ten tax laws (including Federal Inland Revenue Service Act, TETFUND Act, Industrial Inspectorate Act, National Information Technology Development Act, Personal Income Tax Act, Stamp Duties Act, Taxes and Levies Act, etc) in Nigeria that focuses on tax administration.

The legislators have achieved significant progress on this promise with the enactment of the Finance Acts of 2019 and 2020. The Finance Acts of 2019 and 2020 were also enacted by the legislature to improve the tax regime and administration in Nigeria.

At the HoR, the Finance Bill, 2019 (HB 423) which was sponsored by the executive scaled the first and second reading on the floor of the green chamber in November 2019 before being passed in December 2019.

Similarly, the Finance Bill, 2020 (HB 1139) was also passed in December 2020 after scaling the first, second, and third reading on the floor of the house.

The passage of these two bills and the current amendment of the Finance Bill, 2021 represent a remarkable period as the country’s legislators move to ensure fairness and curb tax avoidance through the use of ICT in tax collection.

In Part IV of the Finance Act, 2020 (Federal Inland Revenue Service (Establishment) Act), Section 25 of the FIRS Act was amended by inserting new subsections (3), (4), and (5), all focusing use of digital platforms or proprietary technology for tax collection and tax administration in Nigeria.

Furthermore, other sections of the Act were focused primarily on other important tax laws in the country such as the Personal Income Tax Act, Industrial Development (Income Tax Relief) Act, TETFUND Act, Stamp Duties, Custom and Excise Duties Tariff, VAT Act and Companies Income Tax Act.

Promise: Conduct a review of all federal tax laws to encourage investment, incentivize enterprise, ensure fairness and curb tax evasion through the use of ICT in tax collection and administration

Furthermore, the introduction and passage of the Finance Act, 2021 (HB 1757) by the legislators in December 2021 was an improvement on the previous Finance Act. In the same vein, its clauses also include the amendment of the important tax laws that were focused on in the Finance Bill 2020.

Experts in taxation have continued to underscore the importance of the Act and how it will signal a change in the country’s revenue generation system. In KMPG’s Finance Act, 2021 Impact Analysis, Wole Abayomi, the Head of Tax, Regulatory & People Services KPMG in Nigeria noted that “The passage of the Act reinforces the Federal Government's commitment to making incremental changes to Nigeria’s fiscal framework, and these changes continue to be pivotal to achieving Nigeria’s economic growth and development imperatives”. Also, Ajibola Olomola, a Partner at KPMG noted that the changes in the Act are expected to boost investors’ confidence and put the country on the path to sustainable growth.

With the progress made on this promise since the inauguration of the ninth Assembly and the fast-paced passage of the Finance Acts in 2019, 2020, and 2021 by the Gbajabiamila-led Green Chamber, we, therefore, rate this Promise as Kept.

‍