NO INHERITANCE TAX IN NEW BILLS – OYEDELE
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The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has clarified that inheritance tax will not be reintroduced in the new tax bills before parliament.
Oyedele made this clarification on Thursday during a public hearing on the four tax reform bills, organized by the House of Representatives Committee on Finance, headed by Hon. James Faleke, in Abuja.
Addressing concerns over claims that the inheritance tax had been reintroduced, Oyedele explained that the misinterpretation stemmed from Section 4, Subsection 3 of the Nigerian tax bill, which only addresses family income.
“If an individual owns a property and rents it out, they pay tax on the rent. Similarly, if a family owns a house and rents it out, they should also pay tax. If we exempt families from taxation, then all properties in Nigeria will simply be declared family-owned, and no one will pay tax,” he said.
He emphasized that income and inheritance are different, with inheritance referring to assets, wealth, and cash, while income is derived from external earnings.
“This provision is not new. It has been in our tax laws since independence. As we speak today, it exists in the Personal Income Tax Act, Section 2, Subsection 5,” he added.
Oyedele further stated that inheritance tax was introduced by the military in 1979 but later repealed in 1996. He reassured that there is no attempt, directly or indirectly, to bring it back.
The Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji, also spoke at the hearing, criticizing investors in free zones who attempt to move their products into Custom areas, which operate under a different tax regime.
“No responsible government will allow investors to produce in free zones and then dump their products into Custom areas to avoid taxation,” Adedeji stated.
He maintained that the government would not allow tax evasion strategies that create economic distortions.
Responding to allegations that 70% of investors in free zones had withdrawn funds due to unfavorable policies, Oyedele dismissed the claim as false.
“Cash in circulation in Nigeria is about ₦4 trillion, while the total money supply exceeds ₦100 trillion. Last year alone, the value of digital transactions was ₦1.08 quadrillion. Nobody is withdrawing money to run from Nigeria,” he said.
He clarified that no law allows free zone entities to sell into the Custom territory while competing with businesses that pay taxes, stressing that such a policy would distort the economy.
The President of MAN, Otunba Francis Meshioye, expressed concern that the tax bill excludes waivers on profits from manufactured exports.
He highlighted that from 2019 to 2023, the value of manufactured exports dropped from $6.7 billion to $1.6 billion, partly due to insufficient incentives.
MAN also opposed unrestricted access of products into Export Free Zones, arguing that no country except Nigeria allows 100% free access. They recommended limiting it to 25%, similar to Ghana’s 30% threshold.
The OPTS warned that the proposed tax bills could erase VAT gains for the oil and gas sector, particularly regarding Petroleum Profit Tax.
A representative of the group called for codification of incentives under the proposed tax reforms, noting that if Section 87 of the bill is implemented, stabilization funds will not be available for companies under the Petroleum Industry Act (PIA).
The group urged lawmakers to ensure that the bills do not increase the cost of doing business, cautioning that excessive taxation could push investors to other countries.
While stakeholders acknowledged the government’s commitment to tax reforms, concerns remain about incentives for manufacturers and the impact on investment. The House Committee on Finance has pledged to address these issues before the final passage of the tax bills.
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