Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has outlined the Nigerian government’s strategy to curb tax evasion among affluent citizens and ensure they contribute more through proposed tax reform bills.
Speaking during an X space event hosted by Nairametrics in collaboration with Business Day, BudgIT, and CODE, Oyedele emphasized that the top 5% of earners in Nigeria are not paying their fair share of taxes compared to their counterparts in other nations.
“While wealthy individuals often seek ways to evade taxes globally, Nigeria makes it particularly easy for them,” he stated. “For instance, South Africa collected personal income tax last year that was over 15 times what Nigeria received, with 90% of that revenue coming from the top 5% of earners. In the United States, the top 5% contribute more in personal income taxes than the remaining 95% combined. We need to make it harder for high earners to avoid their tax obligations.”
Oyedele announced that the proposed reforms would increase the tax rate for high earners from approximately 19% to 25%—still one of the lowest rates globally.
Utilizing Data and Intelligence to Combat Tax Evasion
When questioned about strategies to prevent tax evasion, particularly among politicians and wealthy individuals, Oyedele explained that the government plans to monitor spending through data and intelligence.
“Nigeria receives intelligence from around the world, making it increasingly difficult for wealthy individuals to conceal their income,” he noted. “Instead of asking individuals how much they have earned, we will determine their earnings based on third-party data. Our understanding of their spending patterns will also aid in tracking their income.”
He added, “If they can hide their income, they cannot hide their spending. The usage patterns of a wealthy individual’s phone differ significantly from those of a lower-income person. Nigeria has signed international treaties that allow us to access data from over 100 countries. This means we can track funds that have been moved abroad, and when we confront individuals with this data, it often leads to panic.”
Key Takeaways from the Proposed Tax Bill
The tax reform bills include provisions aimed at providing relief for low-income earners. Individuals earning below N83,000 will be exempt from income tax, as will businesses with an annual turnover of less than N50 million.
Additionally, the proposed bill outlines exemptions from the new VAT rate for specific supplies, including:
• Oil and gas exports
• Crude petroleum oil
• Feed gasOther exempt items include:
• Goods purchased for humanitarian projects (with upfront VAT paid by the donor)
• Baby products
• Locally manufactured sanitary products
• Military equipment, hardware, and ammunition supplied to security agencies.As the Nigerian government moves forward with these reforms, the focus will be on creating a fairer tax system that ensures all citizens contribute their fair share.
