Ending the VAT row for good

Nigeria is overhauling its tax system. A new bill centralises VAT administration, while a 10% withholding tax on security interest is introduced.

Nigeria’s House of Representatives and the Federal Inland Revenue Service (FIRS) have introduced major tax changes to boost revenue and streamline collection. The House on Tuesday passed for second reading a bill to move Value Added Tax (VAT) to the exclusive legislative list. Co-sponsored by Deputy Speaker Benjamin Kalu and six others, the bill seeks to clarify tax administration, reduce federal–state disputes, cap annual taxes at nine per person or business, and ban outsourcing tax collection to private agents. It has been referred to the Committee on Constitution Review for further consideration. Separately, the FIRS directed banks and financial institutions to begin deducting a 10% withholding tax on interest from short-term securities such as treasury bills, corporate bonds, and promissory notes. Interest on federal government bonds remains exempt. FIRS Chairman Zacch Adedeji said the directive aligns with the government’s effort to widen the tax base and ensure compliance.