FG Plans 25% Income Tax on Wealthy Nigerians

The Federal Government of Nigeria is proposing to raise personal income tax for wealthy individuals to 25%, starting in 2025. This move was announced by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, during the 30th Nigeria Economic Summit.

The proposed increase is part of the Economic Stabilization Bill currently before the National Assembly. Under the new policy, Nigerians earning over N1.5 million annually will face a higher tax burden in an effort to boost the country’s revenue.

Oyedele highlighted the alarming statistics regarding tax compliance in Nigeria. “Only 17% of Nigerians and 30% of businesses pay taxes,” he said, attributing the low compliance rates to widespread distrust in the government. He emphasized the need for a transparent system to improve tax collection and compliance.

To address this, Oyedele proposed the creation of a National Tax Portal, modeled after South Africa’s, which would make tax payments more seamless and transparent. He also pointed out the country’s substantial tax gap, which he estimated to be between 70% and 75%. Closing this gap, he argued, could quadruple Nigeria’s revenue.

The Chairman also criticized unnecessary tax waivers granted to individuals and businesses, describing compliance as the main issue holding back the country’s tax system. The government’s reforms aim to tackle these challenges and increase tax collection.

Earlier this month, Oyedele announced the release of the 2024 Withholding Tax Regulations in the official gazette, signaling the government’s commitment to enforcing stricter tax measures. In September, the Federal Executive Council approved the Economic Stabilization Bill, which includes reforms to 15 tax, fiscal, and establishment laws in Nigeria.