Oyedele: enforcement of tax law won’t be arbitrary

“Under the old system, an individual could pay an effective tax rate of about 19 per cent, but registering the same business as a company pushed the burden above 40 per cent. This was the opposite of global best practice,” he said.

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The minister explained that the reform process prioritised creating incentives for businesses to formalise, while ensuring policy consistency and reducing discretion in tax administration.

Reflecting on past challenges, he recounted instances where policy inconsistencies discouraged foreign investment, including abrupt proposals to significantly increase taxes on gas companies.

“If policies can change overnight, it sends the wrong signal to investors. Consistency is critical,” Oyedele said.

According to him, the new tax framework deliberately protects low-income earners and small businesses.

The minister stated that individuals’ earnings around N1 million annually and a large portion of small businesses, estimated at 30 million to 40 million, have limited capacity to pay taxes and are, therefore, shielded under the reforms.

“Nearly half of working Nigerians earn less than N70,000 monthly. Taxing them aggressively would be unjust,” he said.

The reforms also eliminate practices, such as minimum tax payments on loss-making businesses, which he described as effectively taxing capital rather than profit.

Oyedele noted that essential goods and services, including food, education, and healthcare, have been exempted from Value Added Tax (VAT), making the system more progressive.

The minister also explained that the reforms consolidated multiple tax laws into four major pieces of legislation, including the Nigeria Tax Act and the Nigeria Tax Administration Act, aimed at simplifying compliance and improving coordination among tax authorities.

Addressing concerns about discrepancies in the law-making process, Oyedele acknowledged that errors occurred due to manual processes and multiple stages of review.

The minister said steps are underway to correct identified issues through a proposed finance Bill.

“What we need is a more transparent and reliable legislative process where every version of a law is publicly available,” he stated.

Oyedele also underscored the critical role of legal practitioners in shaping economic outcomes through tax advisory and compliance.

“The decisions lawyers help businesses make will determine investment, job creation, and revenue generation,” Oyedele added.

Acknowledging improvements in public revenue utilisation, the minister called for greater impact and efficiency, noting that Nigeria still lags behind countries like South Africa in tax collection.

“If we improve collection, we can significantly increase funding for infrastructure, education, and healthcare,” Oyedele said.

He urged lawyers to focus on effective implementation, stressing that the success of the reforms ultimately depends on how well they are applied in practice.