Nigeria has inaugurated a Technical Subcommittee on Fiscal Policy and Tax Reforms, which will prepare draft versions of the Finance Bill 2027, revised Withholding Tax Regulations and an amended Significant Economic Presence Order.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has inaugurated the Technical Subcommittee on Fiscal Policy and Tax Reforms.
The subcommittee will prepare draft versions of three instruments:
- the Finance Bill 2027;
- the revised Withholding Tax Regulations 2027; and
- an amended Significant Economic Presence (SEP) Order 2027.
These drafts will go to the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) and the Minister for consideration.
The Public Consultation
The inauguration follows a public call for inputs on the Finance Bill 2027, in which the Ministry of Finance invited submissions from the public about changes that could be made to Nigeria’s tax system.
Some 134 submissions were received. Regan van Rooy was among those who made submissions.
The submissions included proposals to:
- simplify and clarify provisions of the new tax laws, particularly those relating to VAT thresholds, withholding tax and capital gains;
- reduce multiple taxation;
- improve coordination among revenue authorities, and expand digitalisation and data sharing;
- strengthen taxpayer rights, accelerate tax refunds, and introduce safeguards for small businesses; and
- address investment and competitiveness concerns in the mining, renewable energy, healthcare and capital markets sectors.
How the Subcommittee Will Work
The subcommittee will assess all submissions objectively and rigorously, regardless of the identity or institutional affiliation of the contributors.
Under its work plan, it will first review the submissions and identify the key issues. It will then prepare working drafts and conduct a legal review, before submitting the draft instruments to the PFPTRC and the Minister for consideration and approval.
The subcommittee has now been inaugurated, so it should be able to start work. We wish them success in their task, and look forward, hopefully, to interactions with the subcommittee during their deliberations.
What We Expect
Nigeria has only recently introduced very significant changes to its tax system, notably in the Nigeria Tax Act and the Nigeria Tax Administration Act.
So we are not expecting many dramatic changes this time, but rather more clarifications and “tidying up”.
That would be no bad thing. Much of what the submissions asked for, such as clarity on VAT thresholds, withholding tax and capital gains, faster refunds and better coordination between revenue authorities, is exactly the kind of work that makes a new tax system operate properly in practice.
The Commercial Implications
Businesses Already Working Under the New Tax Laws
For most businesses, the value of this round is likely to lie in clarification rather than in new rules. Where provisions of the new laws have been unclear in practice, particularly on VAT thresholds, withholding tax and capital gains, this is the process through which they may be fixed.
Businesses Affected by Withholding Tax
The withholding tax regulations are one of the three instruments being redrafted. Businesses that make or receive payments subject to withholding tax will want to watch what the revised Withholding Tax Regulations 2027 contain.
Non-Resident Businesses
An amended Significant Economic Presence Order is also on the table. Non-resident businesses whose Nigerian tax position depends on the SEP Order will want to follow the draft closely.
Mining, Renewable Energy, Healthcare and Capital Markets
The submissions raised investment and competitiveness concerns in these four sectors in particular. Businesses in them will want to see whether those concerns are reflected in the drafts.
Looking Ahead
The subcommittee’s first task is to work through 134 submissions, before any drafting begins, and its drafts then pass through a legal review and on to the PFPTRC and the Minister. So it will be some time before the content of the Finance Bill 2027 is known.
It will be interesting to see which of the submissions make their way into the drafts. We hope the subcommittee takes the opportunity to resolve the practical difficulties that taxpayers have encountered under the new laws.
If you would like to discuss what the Finance Bill 2027 and the related instruments could mean for your business in Nigeria, our team would be glad to help. Get in touch.
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