FG plans 25% tax on Nigerians earning above N100m

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, announced that wealthy Nigerians earning N100 million or more monthly could face a personal income tax rate of 25% if a proposed tax bill is approved by the National Assembly. He highlighted that currently, 90% of taxpayers are individuals who arguably should not be taxed, advocating for a more efficient and fair tax system in Nigeria.

This announcement was made during a breakout session at the 30th Nigeria Economic Summit held on Monday in Abuja, organized by the Nigerian Economic Summit Group alongside the Ministry of Budget and National Planning. Oyedele stressed the importance of balancing the tax burden for low-income earners while ensuring that the wealthy contribute more to government revenue. “For those earning N100 million a month, we will take up to 25% from them because we need to balance the books,” he said.

The fiscal policy expert emphasized the government’s commitment to ensuring that the right individuals pay taxes and mentioned that his committee is actively working towards this goal. He indicated that the proposed reforms could take effect starting January 2025, pending the lawmakers’ approval.

For middle-income earners making N1.5 million or less per month, Oyedele revealed that their tax obligations would decrease, while those with higher earnings would see gradual increases in their tax rates, reaching 25%. Lower-income earners would be fully exempt from personal income tax.

The reforms also aim to alleviate the tax burden on businesses. Oyedele noted, “Currently, any VAT businesses pay on assets—whether for building a factory or purchasing equipment—affects their costs and pricing. Once the reforms are in place, businesses will receive a full 100% credit on services and assets.”

He added, “Tax compliance will improve once we enforce it properly. Nearly 90% of the people currently paying taxes shouldn’t be. We believe that 97% of the informal sector should be exempt from taxation, as many are simply trying to survive.”

Regarding the committee’s efforts to ensure appropriate tax compliance, Oyedele mentioned the use of primary data identification channels to accurately classify taxpayers. Additionally, the corporate income tax rate is expected to decrease from 30% to 25%, which Oyedele described as a significant benefit for businesses. Other major changes include reducing or eliminating VAT on essential goods and services like food, healthcare, education, accommodation, and transportation, which significantly impact lower-income households.

However, he acknowledged that not all sectors would see reduced tax rates, as VAT on other goods and services might increase to balance government revenue. Oyedele also pointed out that inflation acts as a “disorderly” tax on the population, diminishing the value of their money without requiring legislative action.

In response to concerns about tax incentives and waivers, Oyedele argued that indiscriminate incentives can harm the economy, and removing unnecessary ones could benefit businesses without sacrificing government revenue. “We cannot accommodate all the incentives requested. Our focus is on eliminating those that are not essential, which is precisely what we are doing,” he concluded.