Wealthy Nigerians to Face 25% Income Tax Under Proposed Reforms: Oyedele
By Patience Ikpeme
In a significant policy shift aimed at addressing Nigeria’s fiscal challenges, Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, announced on Monday that wealthy Nigerians earning N100 million and above monthly could soon be subjected to a staggering 25 percent personal income tax rate.
The announcement was made during a breakout session at the landmark 30th Nigeria Economic Summit organised by the Nigeria Economic Summit Group (NESG) in Abuja, stirring considerable discussion among stakeholders and policymakers.
The proposed tax reform bill, which is set to be deliberated by the National Assembly, aims to create a fairer tax landscape by increasing the contribution of high earners while alleviating the tax burden on lower-income groups. “If you earn N100 million a month, we’re taking up to 25 percent from the rich people,” Oyedele stated, emphasizing the necessity of balancing government revenue against the needs of the populace.
The proposed changes are slated for implementation beginning January 2025, contingent upon the passage of the bill by lawmakers. For middle-income earners, defined as those making N1.5 million or less per month, the reforms promises a reduction in their personal income tax obligations. In a bid to foster financial relief for the poorest Nigerians, individuals within this lower income bracket will be completely exempt from personal income tax.
Oyedele elaborated on the broader implications of the reforms, highlighting the need for a restructured tax system that promotes equity and stimulates economic growth. “The current system does not adequately reflect our socioeconomic realities,” he explained. “We must ensure that everyone contributes their fair share while safeguarding the vulnerable.”
The proposed tax overhaul is designed not only to impact individuals but also seeks to ease the financial burden on businesses. Oyedele asserted that currently, businesses bear the full weight of Value Added Tax (VAT) on essential assets—ranging from factory equipment to office technology—which inflates operational costs and ultimately, consumer prices. “Once our reforms are implemented, you get the credit back 100 percent on services and assets,” he promised, indicating a significant shift in the way VAT operates for businesses.
Furthermore, Oyedele announced a planned decrease in the corporate income tax rate from 30 percent to 25 percent, a move he described as “huge” for business competitiveness. This reduction aims to incentivize growth and investment, fostering a conducive environment for Nigerian entrepreneurs.
In tandem with these measures, the proposed reforms will also see a reduction or even elimination of VAT on essential goods and services, such as food, health care, education, accommodation, and transportation—areas where lower-income households typically allocate a significant portion of their expenditures. However, Oyedele cautioned that not all sectors would enjoy tax reductions, as some goods and services could see higher VAT rates to ensure a balanced government revenue stream.
Oyedele also touched upon the concerning issue of inflation, framing it as a “disorderly” tax that has eroded the purchasing power of ordinary Nigerians without legislative intervention. Addressing this pressing concern, he urged the administration to adopt policy measures that stabilize the economy and protect citizens from further financial strain.
He concluded with a frank discussion on tax incentives, stressing that indiscriminate incentives often harm the economy. “We cannot give all the incentives you are asking for,” he stated firmly. “We believe the biggest low-hanging fruit is removing unnecessary incentives, and that’s exactly what we are doing.”
As these discussions unfold at the NESG, the country watches closely, knowing that the outcomes of this reform will have lasting impacts on both the wealthy and the less affluent, all while shaping Nigeria’s economic landscape for years to come. Stakeholders and citizens alike will have high hopes that these proposed reforms will not only enhance government revenues but also foster economic stability and inclusivity for different strata of society.
