*A Comprehensive Analysis of the 2024 Tax Bill * North, South, East, and West: Who Gains the Most? * Petroleum, VAT, and Development Inc...
*A
Comprehensive Analysis of the 2024 Tax Bill
*North,
South, East, and West: Who Gains the Most?
*Petroleum,
VAT, and Development Incentives Under the Microscope
*Bridging
Regional Gaps or Deepening Divides?
*Fragile Economy Faces Challenges
Amid Promised Benefits
By Ammar Muhammad Rajab
The Nigeria Tax Bill, 2024, has
emerged as one of the most talked-about legislative reforms in recent years.
While its ambition to modernize the nation’s tax system and boost revenue is
undeniable, experts warn that its implementation could strain Nigeria's already
fragile economy.
Dr. Abubakar Musa, a leading
economist at the Centre for Economic Stability, expressed reservations about
the bill's broader implications for small and medium-sized enterprises (SMEs).
“On paper, this bill is designed to encourage growth in priority sectors, but
the reality is that it will increase compliance costs for many SMEs. These
businesses form the backbone of Nigeria’s economy, and higher tax obligations
could lead to closures or stifle new entrepreneurial ventures,” he stated.
For citizens like Hauwa Mohammed, a
market trader in Kano, the expansion of Value Added Tax (VAT) to include a
broader range of goods is particularly concerning. “Every day, prices go up
because of one new tax or the other. If VAT increases again, customers will buy
even less, and we won’t be able to make ends meet,” she lamented.
Hauwa’s story echoes the worries of
many low-income Nigerians who are already grappling with high inflation and
dwindling purchasing power.
Regional Impacts: Winners and Losers
The bill is expected to have uneven
impacts across Nigeria’s regions. Oil-producing states in the South-South, for
example, are poised to benefit significantly from provisions such as reduced
hydrocarbon tax rates and incentives for gas utilization. “These incentives are
long overdue. They will encourage more investments in the oil and gas sectors
and boost state revenues,” said Engr. Omokaro Idemudia, an industry expert
based in Port Harcourt.
Similarly, industrial hubs like
Lagos and Ogun in the South-West stand to gain from tax exemptions for
businesses in Export Processing Zones (EPZs) and other industrial incentives.
However, some analysts argue that this focus on established industries might
widen existing regional inequalities.
In the North, where the economy is
primarily driven by agriculture and mining, the picture is mixed. Dr. Fatima
Bako, a policy analyst with the Northern Economic Development Forum,
acknowledged the potential for growth but warned of structural hurdles.
“Agriculture and mining are well-represented in the bill, with tax incentives
and reduced royalties. However, the lack of infrastructure in many northern
states will make it challenging to capitalize on these opportunities. Without
targeted investments, these regions risk being left behind,” she said.
What’s in it for Key Institutions?
The bill includes provisions that
will significantly impact major institutions like the Tertiary Education Trust
Fund (TETFund), the National Agency for Science and Engineering Infrastructure
(NASENI), and the National Information Technology Development Agency (NITDA).
TETFund is set to receive 50% of the
revenue from the Development Levy imposed on corporate profits for the first
two years after implementation. This funding is earmarked for improving
tertiary education infrastructure, scholarships, and staff training. “This is a
crucial lifeline for Nigeria’s higher education sector, which has suffered from
years of underfunding,” noted Dr. Mahmud Muhammad, a university lecturer.
NASENI stands to gain from the
bill’s emphasis on research and development (R&D) tax incentives. Companies
investing in innovative projects, particularly in manufacturing and renewable
energy, can deduct R&D expenses from their taxable income. Engr. David
Okocha, a senior engineer, commented, “This provision will not only boost local
manufacturing but also encourage more companies to partner with us in
developing homegrown technologies.”
NITDA, tasked with overseeing
Nigeria’s digital transformation, is another beneficiary. The bill introduces
taxes on digital economy profits earned by multinational tech companies
operating in Nigeria. “For too long, global tech giants have made significant
revenue here without paying their fair share. This bill could help level the
playing field for local startups,” said Aisha Abdulkareem, a software developer
based in Abuja.
Concerns Over Implementation and
Transparency
Despite these potential gains,
experts caution that the bill's complexity could pose significant
implementation challenges. “From digital economy taxation to arm’s length
principles for related-party transactions, these are advanced tax systems that
require strong administrative capacity. The Federal Inland Revenue Service
(FIRS) will need substantial support to handle this,” warned Dr. Musa.
Additionally, there are fears that
the increased revenue pool might be vulnerable to corruption and mismanagement.
“Nigeria’s history with public funds is troubling. Unless transparency and
accountability are prioritized, these funds might not reach the sectors and
regions that need them most,” added Dr. Bako.
The Nigeria Tax Bill, 2024, is a
bold step toward fiscal reform. However, its success will depend on how well it
balances revenue generation with economic stability and equity. As Nigeria
watches its rollout closely, citizens and businesses alike hope the government
will ensure that no one is left behind in this transformative journey.
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