Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reform, has stepped forward to clarify another contentious issue surrounding the proposed tax reform bills being debated in Nigeria’s National Assembly and discussed widely across the nation.
In recent days, reports and speculations have circulated claiming that the tax reform bills include provisions for an inheritance tax—a levy imposed on the wealth or assets bequeathed by deceased individuals to their heirs. However, Oyedele has categorically dismissed these claims as false.
In a statement addressing the controversy, Oyedele emphasized that no provision for inheritance tax exists within the current bills under review. He explained that the misconception likely stems from misinterpretations of the legislative documents or deliberate misinformation aimed at undermining the reforms.
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“There is no inheritance tax in the proposed tax reform bills,” Oyedele stated firmly. He added that the purpose of these reforms is to simplify Nigeria’s tax system, make it more equitable, and ensure the government collects revenue efficiently without overburdening individuals or businesses.
The uproar surrounding the alleged inheritance tax underlines a broader concern among Nigerians about the impact of fiscal reforms on personal and business finances. Many citizens and businesses fear that additional taxes could compound the existing economic pressures in a country grappling with inflation, unemployment, and rising living costs.
Many argue that introducing an inheritance tax—if it were true—would disincentivize wealth creation and disproportionately affect families already struggling with generational wealth gaps. However, Oyedele’s clarification seeks to allay these fears, reinforcing that the committee’s goal is to streamline tax policies rather than introduce punitive measures.
According to him, the guiding principles of the reforms include:
- Simplification of tax laws to make compliance easier.
- Elimination of multiple taxation.
- Improving equity by ensuring the tax burden aligns with taxpayers’ ability to pay.
- Enhancing transparency and accountability in revenue allocation and utilization.
He thus provided an explainer to clarify the issue of inheritance tax.
Question 1: Some people have expressed the view that the tax reform bills seek to impose a tax on inheritance. Is this true?
Answer No 1: There is no such provision contained in the tax reform bills, either directly or indirectly. The inheritance tax was abolished in Nigeria in 1996 when the Capital Transfer Tax Decree was abrogated.
Question 2: What then is the essence of this provision under section 4(3) of the Nigeria Tax Bill – “Income of a family recognized under any law or custom in Nigeria as family income in which the several interests of individual members of the family cannot be separately determined.”
Answer 2: Inheritance is a one-time wealth transfer as a gift during the lifetime of the giver or at death. Unlike inheritance tax which is applicable once, the family income covered under the tax bills is expected to recur from time to time.
Section 4 of the Nigeria Tax Bill stipulates all incomes that are chargeable to tax. Section 4(3) covers taxable income earned by a family, not their inheritance. This is a standard provision under the imposition of income tax which has always been in our tax laws. Currently, it is provided for under section 2(5) of the Personal Income Tax Act LFN 2004 as amended, viz:
“In the case of income of a family recognized under any law or custom in Nigeria as families income, in which the several interests of individual members of the family are indeterminate or uncertain, tax may be imposed only by the territory in which the member of that family who customarily receives that income in the first instance in Nigeria usually resides.”
Question 3: Why is the provision necessary?
Answer 3: If an individual earns an income, they will be taxed accordingly. Where a group of individuals such as a partnership, community, or family jointly earn a taxable income, they cannot be exempted just because they operate as a group of persons. The income will therefore be taxed in the hands of individual members where their respective shares can be determined otherwise the group will be collectively taxed. This ensures equity and prevents a potential loophole in the tax law.
Visit our website http://fiscalreforms.ng and social media accounts for more information including copies of the tax reform bills.
Persistent Misinformation
This is not the first time Oyedele has had to address misinformation surrounding the reforms. Since the committee’s inception, he has actively used media platforms to clarify details, rebut inaccuracies, and engage with citizens on the committee’s objectives.
In a recent appearance before the National Assembly, Oyedele reiterated that the reforms are designed to promote fairness and simplicity, ensuring that Nigeria’s tax policies align with global best practices while addressing the unique challenges of the local economy.
The tax reform bills form part of a broader initiative by the Nigerian government to overhaul the country’s fiscal policies. These reforms aim to address inefficiencies in revenue collection, reduce tax evasion, and expand the tax net to include the informal sector.