CITN endorses tax reforms, advises FG to drop derivation principle

The Chartered Institute of Taxation of Nigeria (CITN) yesterday endorsed the proposed tax reform bills but advised the Federal Government to drop the derivation aspect in order to ensure the success of the reforms.

The President of the Institute, Mr. Samuel Agbeluyi, gave this advise at a media workshop for finance journalists in Lagos, saying,   “If the derivation principle would pose a problem, then it can dropped as we cannot throw away a baby with the bad water”.

Agbeluyi noted that the government has demonstrated a strong commitment to overhauling the nation’s tax system, reducing dependency on oil revenues, and promoting fiscal stability.

The CITN President, while welcoming the government’s efforts at reforming the tax system, urged stakeholders to base their assertions on facts and figures.

He said: “The government’s key reforms and initiatives  include introduction of Executive Orders and Tax Relief Measures.

“President Bola Tinubu signed four executive orders in July 2023, which included significant tax relief measures, such as the suspension of the 5% excise tax on telecommunications services.

“Establishment of the Presidential Fiscal Policy and Tax Reforms Committee, which committee was inaugurated in August 2023 to address critical challenges in fiscal governance, revenue transformation, and economic growth facilitation.

“Fiscal Incentives for the Gas Sector, where the government issued a circular in December 2023, providing fiscal incentives for the gas sector, including import duty waivers and zero-rated VAT for key components and services.

“Deduction at Source (Withholding Tax) Regulations 2024, with the Minister of Finance issuing new regulations in June 2024 to clarify the rules for withholding tax deductions across various tax regimes.”

Agbeluyi  added:” I commend the government’s efforts to make tax compliance easier and more flexible for businesses. The  enhancements to the TaxProMax system and the implementation of a Tax Wallet feature are good. The importance of taxation in Nigeria’s economic development cannot be over emphasized. The Institute welcomes the government’s efforts to reform the tax system and address systemic challenges.”