Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has announced that Nigerians earning over ₦1.5 million monthly will soon be subjected to increased personal income tax rates under the proposed Economic Stabilization Bill.
Speaking recently at the 30th Nigeria Economic Summit held in Abuja, Mr. Oyedele explained that the new tax reforms aim to alleviate the tax burden on lower-income earners while ensuring that wealthier individuals contribute a larger share to the nation’s revenue.
According to Mr. Oyedele, individuals earning below ₦1.5 million monthly will benefit from reduced or zero personal income tax (PIT), with many low-income earners being completely exempt. In contrast, those earning more than this threshold will see their taxes incrementally increase, with the highest earners facing rates as high as 25 percent.
Currently, even the wealthiest individuals, including those earning as much as ₦100 million per month, pay an effective rate of just 19 percent. The new measures aim to rectify this imbalance by making wealthier Nigerians pay a fairer share.
“If you earn ₦1.5 million or less, your tax will go down. For those at the lower end, they will be completely exempt. But if you earn more than that, taxes will incrementally rise, up to 25 percent,” Mr. Oyedele stated during his address.
Mr. Oyedele noted that the government’s focus is on ensuring that the right individuals and businesses are targeted for tax purposes. For years, the formal sector, which primarily consists of lower-income earners, has shouldered much of the country’s tax burden. The new system seeks to address this by focusing on high-income earners and corporations.
“We found that 90 percent of those currently paying taxes should not be paying. We are developing a system tied to national identification numbers and corporate IDs that will match economic activities with declared incomes. This will allow us to tax the right people,” he explained.
Mr. Oyedele also highlighted that the government would introduce measures to track economic activities, ensuring that proper invoicing and monitoring are conducted to prevent tax evasion.
In addition to the changes to personal income tax, the committee is also rolling out reforms aimed at boosting businesses, particularly manufacturers and micro, small and medium-sized enterprises (MSMEs). These include tax relief for companies generating incremental employment and personal income tax relief for individuals earning between ₦200,000 and ₦400,000 annually.
“We have removed taxes for manufacturers to lower their costs, allowing them to borrow less and expand more,” Mr. Oyedele said, stressing that reducing costs for these sectors will promote business growth and overall economic stability.
In a related development, ongoing discussions in the National Assembly are centered on the possibility of increasing value-added tax (VAT) from the current 7.5 percent to 10 percent. While this proposal could have far-reaching implications for both businesses and consumers, it is intended to boost government revenues and provide much-needed funds for development projects.
While these reforms primarily target high-income earners and large businesses, they are also designed to stimulate economic growth by reducing the financial burden on MSMEs and manufacturers, which are considered vital drivers of Nigeria’s economy.
