The Nigeria Extractive Industries Transparency Initiative (NEITI) has called on the Presidential Committee on Fiscal Policy and Tax Reforms to provide a detailed explanation of its plan to harmonize federal and state tax laws in the proposed tax reform bills currently under review by the National Assembly. The agency also asked for clarification on the roles of subnational governments in the implementation of the bill and identified areas where the policy could be improved.
In a statement released on Tuesday, NEITI, through its Acting Director of Communications and Stakeholders Management, Obiageli Onuorah, highlighted the importance of addressing these issues in light of the significant impact the bill could have on Nigeria’s tax system. NEITI’s review of the draft legislation showed that, while the bill aims to modernize and streamline Nigeria’s tax framework, some areas need more clarity and refinement.
NEITI, echoing the concerns of the Nigeria Governors’ Forum, expressed its support for the tax reform bills but pointed out certain gaps in the legislation, particularly in relation to the extractive industries, which are central to NEITI’s mandate. The agency noted that while the bill seeks to unify tax legislation across the country, the provisions related to harmonizing federal and state tax laws are not clear. There are also concerns about the roles of subnational governments in the execution of the bill’s provisions.
NEITI’s Executive Secretary, Orji Orji, emphasized that the proposed reforms could improve Nigeria’s tax administration, broaden its tax base, and align the country with global best practices. The bill’s provisions on consolidating legal frameworks, taxing digital assets, and introducing measures to curb tax evasion were seen as promising, but NEITI recommended further clarification on some points.
In particular, NEITI raised concerns about the bill’s approach to tax issues affecting the oil, gas, and mining sectors, which includes the taxation of petroleum operations, VAT, and tax incentives. The agency called for clear guidelines to ensure alignment between federal and state tax systems and for a more defined approach to resolving jurisdictional conflicts between different levels of government.
Regarding the taxation of digital assets, NEITI supported the bill’s alignment with global practices but recommended that clear definitions and valuation guidelines be established to ensure effective implementation. The agency also emphasized the need for exemptions or phased implementation for small businesses to support their growth.
NEITI also commended provisions related to resident and non-resident taxation but suggested that clearer criteria be set to avoid disputes and challenges in enforcement. The agency highlighted the need for international collaboration to ensure the effective enforcement of minimum tax rates for foreign subsidiaries, a provision aimed at curbing profit shifting.
On employee taxation, NEITI called for explicit guidelines to value benefits in kind, such as accommodation and other perks, to prevent disputes. Additionally, NEITI pointed out the exclusion of partnerships and joint ventures in petroleum operations, urging that this gap be addressed for fairness in the extractive sector.
The agency further recommended a reduction in hydrocarbon tax rates for smaller operators, an expansion of incentives for carbon capture, and the introduction of incentives for renewable energy development projects in line with global energy transition goals. NEITI also called for better measures to improve VAT compliance and prevent evasion, particularly in the informal sector and among small- and medium-sized enterprises (SMEs).
To support the successful implementation of the tax reform, NEITI urged investment in capacity-building for tax administrators and the adoption of data-driven monitoring systems. The agency also advocated for a clear dispute resolution mechanism to address any conflicts arising from the new tax provisions.
In its closing remarks, NEITI emphasized the importance of engaging with critical stakeholders, especially civil society organizations, throughout the reform process. The agency offered to lead these engagements, drawing on its long-standing relationships and trust with civil society groups to ensure transparency and accountability in the implementation of the reform.
