Clarification on Nigeria’s Tax Reform: No Inheritance Tax Reintroduced

Taiwo Oyedele confirmed that Nigeria’s tax reform bills will not reintroduce inheritance tax, clarifying that the focus is on family income. The FIRS Chairman criticized manufacturers selling in customs areas without adhering to tax laws, while the Manufacturers Association expressed concerns over sufficient incentives for export-focused industries. Overall, the reform aims to promote fair competition and economic growth.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, confirmed on Thursday that the proposed tax reform bills will not reintroduce inheritance tax in Nigeria. He clarified this point during a public hearing organized by the House of Representatives Committee on Finance, chaired by Hon. James Faleke, addressing misunderstandings related to tax laws.

According to Oyedele, the section of the tax bill in question refers to family income rather than inheritance. He explained that while individuals or families who rent out properties are taxable on rental income, inheritance involves assets, wealth, and cash transfers, which are separate tax considerations. He emphasized that the provision in the tax bill is consistent with existing tax laws in Nigeria since independence.

He elaborated on the taxation of family incomes, stating that income can be attributed to specific family members or taxed collectively. He highlighted that villages and communities are also taxed if they rent out properties. Oyedele reassured stakeholders that there has been no intention to revive inheritance tax since the repeal of the Capital Transfer Tax in 1996.

Responding to claims that 70% of investors had withdrawn funds from free zones due to unfavorable policies, Oyedele dismissed these assertions as unfounded. He noted the importance of cash circulation in Nigeria, estimated at four trillion naira, while indicating that the total money supply remains over 100 trillion naira. This suggests that there is substantial liquidity within the economy.

Zach Adedeji, Chairman of the Federal Inland Revenue Service, criticized manufacturers in free zones who attempt to sell products in customs areas. He asserted that such practices create economic distortions, stating that no responsible government would ignore violations of tax laws. Adedeji highlighted the significance of fair competition between tax-compliant businesses and those in free zones.

Francis Meshioye, President of the Manufacturers Association of Nigeria, expressed support for the government’s tax reform initiative but raised concerns about insufficient incentives for export-focused manufacturers. He opposed unrestricted sales into Export Free Zones, arguing that such practices are not typical in other countries, citing Ghana’s more restrictive policies. He proposed limiting goods sold into the free zone to 25%.

Meshioye praised the proposed reduction in corporate income tax as a means to stimulate production and economic growth, noting that similar strategies are employed worldwide. His remarks reinforce the need for supportive policies that encourage manufacturing and exports in Nigeria.

In summary, Taiwo Oyedele’s reassurances regarding the tax reform bills clarify that inheritance tax has no place in the current proposals. The importance of distinguishing between income and inheritance taxes is emphasized, alongside a reassurance of economic stability. Additionally, both the FIRS Chairman and the MAN President contribute to the discourse on promoting fair tax practices and incentivizing manufacturers, highlighting critical areas for economic development.

Original Source: www.zawya.com