By Becky Usman

President Bola Ahmed Tinubu established the Presidential Fiscal Policy and Tax Reforms Committee to evaluate and provide recommendations on reforms aimed at shaping Nigeria’s fiscal policy and tax system.

The Committee’s mandate encompasses three key areas: Fiscal Governance, Revenue Transformation, and Economic Growth Facilitation.

The committee’s work is organized into three phases: Quick Wins to be implemented within 30 days, Critical Reforms to be executed within 6 months, and full Implementation within 1 year.

Having presented its findings to the President, the committee has put forward a set of significant recommendations to address pressing economic concerns. These recommendations span various areas, including exchange rate management, the consequences of fuel subsidy removal, inflation control, and support for economic growth. The key recommendations include, but are not limited to:

1. Initiatives to eliminate redundant functions in the public sector, ensure responsible financial management, and maximize the value of government assets and natural resources.
2. Enhanced policy coordination and collaboration among Ministries, Departments, and Agencies (MDAs), economic management teams, and policy execution teams.
3. Leveraging technology, specifically the “Data4Tax” platform, to expand the tax base.
4. Raising the personal income tax exemption threshold and personal relief allowance.
5. Tax incentives for the private sector, particularly for raising wages for low-income employees, offering transport subsidies, and creating new jobs.
6. Allowing businesses in Nigeria to pay taxes for foreign currency-denominated transactions in the local currency (Naira).
7. Facilitating Nigerians’ access to global employment opportunities while based in Nigeria.
8. Temporarily suspending Value Added Tax (VAT) on diesel and offering tax exemptions for Compressed Natural Gas (CNG), CNG conversion, and renewable energy items.
9. Conducting a comprehensive review of tariffs for the 43 items previously banned from accessing foreign exchange in the official market, and reviewing the fiscal policies related to other items restricted from importation.
10. Overhauling Withholding Tax Regulations to simplify the process and reduce the burden on businesses’ working capital.
11. Promoting the use of mobile phones for conditional cash transfers and implementing a framework for the proceeds from subsidy removal and forex reform, including a national portal for tracking government spending at the federal, state, and local levels.
12. Suspending multiple taxes that impose hardships on low-income individuals and small businesses, with compensation from revenue windfalls of specific agencies.
13. Expanding the official foreign exchange market to include Bureau de Change (BDCs), forex apps, and retail forex dealers, while outlawing transactions on the black market.
14. Digitizing Nigeria’s forex system to discourage speculative demands and the hoarding of foreign exchange in cash.
15. Imposing an excise tax on foreign exchange transactions conducted outside the official market.
16. Implementing forward contracts for the importation of Premium Motor Spirit (PMS) as a short-term measure, pending improvements in key economic indicators.
17. Eliminating the forex verification portal and the requirement for a Certificate of Capital Importation, as well as relaxing restrictions on the repatriation and use of export proceeds by exporters.
18. Addressing obstacles to export promotion and streamlining the process of receiving Export Expansion Grants.
19. Adapting the Tax ProMax system to permit taxpayers to make partial payments of outstanding tax liabilities.
20. Providing a waiver of penalties and interest charges for taxpayers who settle their outstanding tax obligations in full by December 31, 2023.

These recommendations signify a comprehensive effort to revamp Nigeria’s fiscal policies and tax system to bolster economic growth and create a more equitable tax environment.