The Federal Inland Revenue Service (FIRS) has clarified that multiple taxations at the federal level would be effectively put to rest once the new tax laws become operational on January 1, 2026.
FIRS also said the federal government is engaging sub-national governments with the hope of coming up with instruments that would constrain state and local governments from indiscriminate imposition of taxes on businesses.
It made these clarifications to allay the fears of the organised private sector (OPS) that multiple taxations might persist under the new tax regime that will become effective from 2026.
The Coordinating Director, Compliance and Enforcement, FIRS, Mr. Matthew Gbonjubola, who addressed members of American Business Council (ABC) in Lagos during the weekend on “Navigating Nigeria’s New Tax Era” told THISDAY there is nothing like Capital Gain Tax (CGT) because it has been harmonised with Company Income Tax (CIT) as one tax on a company’s profit.
Gbonjubola said: “Nigeria is a federation with three tiers of governments that are constitutionally empowered to levy taxes.
“So, literally, the new tax regime may not stop multiple taxations. But it has stopped it at the federal level.
“The next level is to engage with sub-national governments, which I know government is actively doing to have further instruments that will constrain governments at the sub-national levels not to impose taxes indiscriminately to ensure fewer number of taxes so that businesses are not encumbered.”
He also said that what has been described as sharp increase from 10 per cent to 30 per cent on CGT is a misconception because there is no longer CGT under the new tax laws.
“All gains that are business gains are business gains. All gains that are personal gains are personal gains.
“The new law does not differentiate between capital and personal profits. It just put them together so that businesses will pay one tax for the two.”
He also said that the removal of the exemption on foreign gain aligned with new rules on global income tax.
According to him, “Nigeria is poor and is looking for revenue. So, why should we allow money we can collect revenue from to be taken to another country?
The FIRS director also debunked the claim that the new tax regime would increase the burden of compliance on businesses.
“I think it is the opposite. From my own vantage position I will say that the new law has significantly reduced the current tax burden on businesses and has not put any new burden on them.
“Under the old laws a business will file different taxes on different days.
“But these new laws have consolidated their filing to probably just two: their annual return and all other returns they should file like PAYE, VAT, withholding tax, etc., which can be done online.
“So, the issue of compliance burden has been significantly reduced under the new law,” he said.
He also said that the law has fixed its commencement date on January 1, 2026, which cannot be postponed to accommodate the request by some members of the OPS because businesses participated in putting the new tax laws together and were aware of what that is coming.
Speaking in the same vein, Partner, Tax and Regulatory Services, Deloitte, Mr. Chijioke Odo, said that the new tax laws have reduced the numbers of agencies that would be collecting taxes at the federal level to one, which is the Nigeria Revenue Service (NRS).
Odo said: “Only the NRS will assess businesses for taxation at the federal level, which will reduce the issue of multiple taxations.
“Today, we have several development levies businesses are meant to pay but the new law has consolidated them at 4.0 per cent single tax payment.”
He also said that some of the things that have been introduced under the new tax laws like the removal of exemption on foreign gains are neither novel nor peculiar to Nigeria and should not impact negatively on foreign investments because foreign companies are already aware of them.
“Nigeria is even among the last to implement some of these rules,” he said.
On whether the enforcement date of the new tax laws would be extended, Odo said that the National Tax Policy stipulated 90 days transition period for a new tax law to come into effect.
“Now the government has given more than the required 90 days,” he said.
Dike Onwuamaeze
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