The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, says the Finance Act will become obsolete once the proposed Tax Reform Bills are passed into law by the legislative and executive arms of government.
During a stakeholder session for tax consultants and chief financial officers (CFOs), Oyedele explains that the committee recommends discontinuing the annual Finance Act in favor of a more stable and predictable tax framework. He emphasizes that the Tax Reform Bills will integrate relevant provisions from previous Finance Acts, making them unnecessary after the reforms take effect.
Why the Shift to Tax Reform Laws?
Oyedele highlights the disruptions caused by annual Finance Acts, describing them as a source of uncertainty.
“At the last minute, a new Finance Act emerges, leaving businesses scrambling to understand its implications. With these reforms, we aim to establish a stable system that will remain effective for at least five years,” he explains.
He adds that any regulations not included in the Tax Reform Bills will no longer apply once the bills are enacted.
“Anything missing from these bills is not intended to exist after they are passed,” Oyedele states, emphasizing that all current tax laws have been considered during the drafting process.
The committee proposes a five-year review cycle for the new tax framework to ensure it remains relevant and effective.
Background on Finance Act Amendments
Earlier this year, the Nigerian Senate amended the 2023 Finance Act, increasing the windfall levy on banks’ foreign exchange revaluation gains from 50% to 70%. This move sparked debates about its timing and potential impact.
Critics argue that retroactive tax measures, such as the windfall levy, undermine trust and create legal uncertainties. Some experts warn that these policies could discourage investment and shift the financial burden to customers.
The proposed Tax Reform Bills aim to address these challenges by offering a comprehensive, transparent, and predictable fiscal policy framework designed to foster economic growth and attract investments.
