95% of informal sector to be exempted from paying taxes, says Oyedele

Kunle Sanni

the Presidential Fiscal Policy and Tax Reforms Committee has said it is developing a new tax relief system that will benefit 95 per cent of the country’s informal sector.

The chairman of the committee, Taiwo Oyedele made this announcement during the committee’s closing session in Abuja on Saturday.

He noted that the new system would ensure the informal sector are legally exempted from all taxes; withholding tax, company income tax, even payee on their staff.

He explained that the federal government believes that the informal sector who are trying to earn legitimate living, should be supported and allowed to grow to a point where they can then have the ability to pay taxes.

The new system, according to Oyedele, aims to provide relief to small businesses that earn N25 million or less annually by exempting them from various taxes that have hindered their progress over time.

“So, we think that 95 per cent of the informal sector should be legally exempt from all taxes: withholding tax, company income tax, and even payee taxes on their staff.

Speaking on the targeted threshold, Oyedele said, ‘’We’re using data to inform our decisions. Currently, if you earn N25 million a year or less, you don’t have to pay company income tax; you don’t have to worry about VAT.

‘’We think that the informal sector is people who are trying to earn a legitimate living; we should allow them to be and support them to grow to a point where they can then have the ability to pay taxes,” he said.

Oyedele also mentioned that the proposed reforms will target the top five percent of the sector, middle class and elite, to pay taxes. He noted that the days of being above the law in paying taxes are over.

The committee, he said, is currently working on drafting laws that will bring about the necessary changes in the country’s fiscal policy and tax reform system.

He added, “The new laws will ensure that the reviews are sustained by all future governments, and the efforts do not go to waste after a year or two.

He also urged all stakeholders to cooperate with the government in implementing the new fiscal and tax policy which will benefit the citizens as a whole.

“We think that the days of being above the law in paying taxes are over. This is the same thing we’re saying to our leaders, whether they are elected or appointed.

‘’We think they have to lead by example by showing that they have paid the taxes, not only on time but correctly, to the lawful authorities as contained in the various laws,” he said.

He clarified that some of the taxes that Nigerians were complaining about were already established in the constitution, which the committee had thoroughly examined and was now calling for a review.

Oyedele mentioned that the report from the committee would undergo the standard legislative process to ensure that it is legally binding.

Moreover, he stated that the committee has been working in collaboration with the subnational governments and local councils to bring a uniformity to the tax system across the country, thereby harmonizing the taxes to a single-digit rate.

‘’We think we can keep that within single digits across local, state and federal governments combined, and then improve the efficiency of collecting those taxes,” said Oyedele.

Westernpost reported that the Vice President Kashim Shettima stated that the tax reforms in Nigeria under the administration of President Bola Tinubu are aimed at improving the system for the benefit of all Nigerians.

The Vice President, represented by Aliyu Umar, the Special Adviser to the President on General Duties (Office of The Vice President), explained that the dynamics of the nation’s fiscal landscape prompted the Tinubu administration to pause and reconsider the direction it was going. He also pointed out the policy thrust of the administration’s tax reforms.

“Our aim remains the revitalisation of revenue generation in Nigeria while sustaining an investment-friendly and globally competitive business environment,” he noted.

“I am confident that both the federal and state governments stand ready to ensure the effective implementation of your reform proposals, and we shall provide the institutional framework to guarantee the adoption of the consensuses of this committee, aligning them with our economic agenda,” he added.