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TINUBU’S TAX REFORMS SET TO SPUR BUSINESS GROWTH AND INVESTMENT

In a landmark move aimed at revitalizing Nigeria’s economy, President Bola Ahmed Tinubu has introduced sweeping changes to the nation’s tax system through the National Tax Bill 2024. The reforms, which target small and large businesses alike, have been hailed as a game-changer for fostering growth, boosting investments, and simplifying tax compliance.

The centerpiece of these reforms is the amendment to the Companies Income Tax Act (CITA) of 2004, which now offers unprecedented relief to businesses across the country. Below are the key changes and their expected impact on the Nigerian economy:

Small Businesses to Pay Zero Tax  

Under the new regime, the threshold for small companies has been increased from ₦25 million to ₦50 million in annual turnover. Companies within this bracket will now pay zero corporate income tax. This is expected to ease the financial burden on small enterprises, freeing up capital for expansion and innovation.

“This is a welcome development for us,” says Adebola James, a Lagos-based entrepreneur. “The tax relief will allow small businesses like mine to reinvest in operations and create more jobs.”

Tax Rates Slashed for Larger Firms  

In a bold step to attract more investment, the government has also announced a reduction in the corporate tax rate for large companies. From the current 30%, the rate will drop to 27.5% in 2025 and further decline to 25% by 2026. This reduction is expected to make Nigeria a more competitive destination for both local and foreign investors.

A Simplified Levy Structure  

Another major reform is the consolidation of various levies into a single Development Levy. Previously, companies were required to pay a 3% Education Tax, a 1% NITDA levy, and a 0.25% NASENI levy. Starting in 2025, these will be replaced by a single 4% Development Levy, which will gradually decrease to 2% by 2030.

Experts believe this simplification will reduce the administrative burden on businesses and improve compliance. “Managing multiple levies was a nightmare,” says Chike Okafor, CFO of a leading manufacturing firm. “The new structure will save time and costs.”

Impact on the Economy  

The reforms are expected to have far-reaching effects. Analysts predict a surge in job creation, increased investment inflows, and greater competitiveness for Nigerian businesses. By easing the tax burden, President Tinubu’s administration aims to create a business-friendly environment that encourages growth and innovation.

“This is a masterstroke,” says Dr. Aisha Bello, an economist at the University of Abuja. “By lowering taxes and simplifying levies, the government is signaling its commitment to economic growth.”

Challenges and Prospects  

While the reforms have been widely applauded, some experts caution that the government must ensure adequate revenue generation to fund public services. However, the phased reduction in levies is designed to balance fiscal needs with business interests.

The Tinubu administration remains optimistic. Speaking at a recent press briefing, the Minister of Finance emphasized that the reforms are part of a broader strategy to diversify Nigeria’s economy and reduce dependency on oil revenue.

Conclusion  

As Nigeria embarks on this new tax journey, businesses and investors are watching closely. With a promise of lower taxes and a simplified system, the Tinubu administration is positioning the country as a hub for economic opportunity and growth.  

For now, entrepreneurs like Adebola James and Chike Okafor can breathe a little easier, knowing that a more business-friendly future lies ahead.