The Nigeria Tax Act (NTA or "the Act") repeals certain existing tax laws and consolidates the legal framework governing taxation in the country into a single legislation for simplicity and improved tax administration. Consolidating tax provisions into one single document will also help to eliminate overlapping, conflicting or ambiguous provisions that can result in unnecessary complexity and uncertainty. It will, therefore, help to provide a clear and comprehensive view of tax laws in the country and enhance transparency.
The overarching objective of the Act is to streamline Nigeria's tax system by reducing the number of taxes to a manageable single-digit figure. This reform is aimed at enhancing revenue generation, simplifying compliance procedures, and addressing regional disparities in tax administration.
A major thrust of the reform is the elimination of nuisance taxes - those that yield minimal revenue, are costly to administer, and disproportionately affect the poor and small businesses. The focus will now shift to high-yielding and broad-based taxes that are relatively easy to collect. The Act also seeks to merge taxes and levies imposed on the same or substantially similar tax bases to reduce duplication and inefficiency.
To ensure long-term impact, the Act aims to institutionalise tax harmonisation efforts; thereby ensuring that the simplified structure is sustainable across all levels of government. While the reform has been praised for its potential to modernise Nigeria's tax landscape, it has also sparked diverse reactions regarding its possible economic and social consequences.
As majority of the provisions of the existing tax laws are retained in the consolidated Act, this Newsletter will focus on the key changes, their implications for businesses and our recommendations for enhancing their effectiveness to make them align better with global best practices.
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