Nigerian Government Contemplates New Tax on N5 Million Monthly Earners

The Nigerian federal government is considering the implementation of an additional tax on individuals earning N5 million or more per month. This potential policy shift was revealed by Mr. Taiwo Oyedele, the chair of the Presidential Committee on Fiscal Policy and Tax Reforms, during an assessment workshop held in Lagos on Thursday.

Mr. Oyedele highlighted that the government aims to reduce the personal income tax (PIT) for Nigerians earning less than N2 million monthly. He argued that the current uniform tax rate, regardless of income level, undermines the progressiveness of Nigeria’s tax policy. In comparison, more advanced economies impose significantly higher tax rates on the wealthy.

“We are proposing that the personal income tax rate should be reduced for anybody who is earning around N2 million per month or less, but the personal income tax rate should be increased for anybody earning N5 million per month or more. Between N2 million and N5 million, your PIT rate would remain the same,” Oyedele explained.

He emphasized the necessity of raising the tax rate for those earning N5 million or more, noting that detailed discussions are ongoing with state governors who will be largely impacted by this change. “In Nigeria today, if you earn N20 million per year, your tax rate is 19 percent. If you earn N1 billion monthly, your tax rate is the same. So our tax rate is not progressive,” he added.

Additionally, the committee has urged the government to stabilize the customs import exchange rate at N800 per dollar to address the volatility caused by frequent fluctuations.