The Presidential Fiscal Policy and Tax Reforms Committee, established by President Bola Ahmed Tinubu, has presented its comprehensive report with recommendations to reshape Nigeria’s fiscal policy and tax system.
The committee’s mission covers Fiscal Governance, Revenue Transformation, and Economic Growth Facilitation.
The committee’s work is organised into three phases: Quick Wins within 30 days, Critical Reforms within six months, and Implementation within one year.
Among the key recommendations are measures to address duplication of functions in the public service, optimise the management of public finances, and enhance the value derived from government assets and natural resources.
Other significant recommendations include:
- Promoting prudent financial management and optimising value from government assets and natural resources.
- Strengthening policy signaling and inter-agency collaboration.
- Leveraging technology (“Data4Tax”) to expand the tax net.
- Increasing personal income tax exempt thresholds and personal relief allowances.
- Providing tax breaks for the private sector, particularly in relation to wage increases for low-income earners, transport subsidies, and net employment growth.
- Allowing the payment of taxes on foreign currency-denominated transactions in Naira for Nigerian businesses.
- Removing obstacles to global employment opportunities for Nigerians residing in the country.
- Suspending VAT on diesel and providing tax waivers on CNG, CNG conversion, and renewable energy items.
- Conducting a comprehensive review of tariffs on 43 items unbanned from accessing forex in the official market and revising fiscal policies on other prohibited imports.
- Reforming Withholding Tax Regulations to simplify and ease the burden on business working capital.
- Facilitating the use of mobile phones for conditional cash transfers and introducing a spending framework for subsidy removal and forex reform windfall, with a national portal for expenditure tracking by federal, state, and local governments.
- Suspending multiple taxes that impose burdens on low-income individuals and small businesses, with compensation through windfall revenues from certain agencies.
- Expanding the official foreign exchange market to incorporate Bureaux de Change (BDCs), forex apps, and retail forex dealers while discouraging transactions in the black market.
- Digitalizing Nigeria’s forex regime to discourage speculative demands and hoarding of foreign exchange in cash.
- Imposing an excise tax on foreign exchange transactions outside the official market.
- Implementing forward contracts for the importation of Premium Motor Spirit (PMS) as a short-term measure.
- Discontinuing the forex verification portal and the requirement for a Certificate of Capital Importation while lifting export proceeds restrictions.
- Addressing impediments to export promotion, bottlenecks regarding Export Expansion Grants, and removing restrictions on repatriation and use of export proceeds by exporters.
- Modifying Tax ProMax to allow taxpayers to make part payments of outstanding tax liabilities.
- Granting waivers of penalties and interest on outstanding tax liabilities provided full payment is made by December 31, 2023.