Wealthy Nigerians May Face 25% Income Tax Under Proposed Reform, Says Taiwo Oyedele

 

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has revealed that high-income Nigerians earning ₦100 million and above monthly could face a 25% personal income tax rate if a proposed tax bill is passed by the National Assembly.

Speaking during a session at the 30th Nigeria Economic Summit, organized by the Nigerian Economic Summit Group and the Ministry of Budget and National Planning, Oyedele emphasized the need for a fairer tax system in Nigeria. He noted that currently, 90% of taxpayers are individuals who should not be taxed.

The new tax reforms, expected to take effect in January 2025, aim to shift the tax burden towards wealthier individuals, while easing it for middle- and low-income earners. Oyedele explained, “If you earn ₦100 million a month, we are taking up to 25% from the rich people. That’s because we need to balance the books.”

For middle-income earners making ₦1.5 million or less monthly, the reforms propose a reduction in personal income tax, while those earning higher amounts will see gradual increases in their tax rates, ultimately reaching 25%. Lower-income earners will be exempt from paying personal income tax entirely.

Oyedele also highlighted plans to alleviate the tax burden on businesses, explaining that reforms will allow companies to receive 100% VAT credits on services and assets, reducing costs and easing pricing pressures. He noted that nearly 97% of the informal sector should be exempt from taxes, as they are merely trying to survive.

In addition to personal income tax changes, the reforms will reduce the corporate income tax rate from 30% to 25%. Oyedele described this as a significant benefit for businesses. There will also be a reduction or elimination of VAT on essential goods and services, such as food, healthcare, education, accommodation, and transportation, to lessen the financial burden on lower-income households.

Despite these tax reductions, Oyedele clarified that VAT on other goods and services may increase to ensure the government maintains a balanced revenue stream. He also addressed the issue of tax incentives, stating that indiscriminate tax waivers harm the economy and that removing unnecessary incentives will benefit the business sector without cutting government revenue.

To ensure that the correct individuals are paying taxes, Oyedele stated that the committee will use data and identification channels to accurately bring the appropriate group of taxpayers into the tax system.