Taiwo Oyedele assured Nigerians that inheritance tax will not return under the new tax bills being considered. He clarified that the laws under review pertain to family income tax, not inheritance. He also disputed claims of investor withdrawals from Nigeria, noting robust money circulation and digital transaction growth. Meanwhile, key industry representatives urged for more incentives for manufacturing and proposed changes to free zone sales policies.
Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, clarified on Thursday that there will be no reintroduction of inheritance tax in the ongoing tax bills under consideration by the National Assembly. Speaking during a public hearing organized by the House of Representatives Committee on Finance, Oyedele emphasized that the interpretation of these provisions as an inheritance tax stems from a misunderstanding of tax terminology related to family income.
He explained that the provision in question, found in Section 4, Subsection 3 of the tax bill, addresses taxation on income generated from properties. This means that if an individual or a family rents out property, they are liable to pay tax on the rental income, distinguishing income from inheritance, which pertains to wealth and assets transferred after death. Oyedele assured that this tax framework has been entrenched in Nigerian tax law since independence, under similar provisions in the Personal Income Tax Act.
Furthermore, Oyedele stated that current law requires families to attribute income to a family member who will be taxed accordingly if such income is tied to specific individuals. If unallocated, the tax liability falls on the family unit. He reinforced that these tax provisions are longstanding and not a sign of any new inheritance tax initiative, referencing historical changes in tax law to further clarify his points.
Addressing concerns from stakeholders regarding investment withdrawals from free zones, Oyedele dismissed such claims, asserting that the actual cash circulation in Nigeria does not support the narrative of mass capital flight. He informed the assembly that while physical currency in circulation may amount to approximately four trillion naira, the broader money supply exceeds 100 trillion naira, pointing to an increase in digital transactions.
Zach Adedeji, Chairman of the Federal Inland Revenue Service, responded to investors operating in free zones who were attempting to market products within customs areas. He asserted that it is not permissible to engage in such activities and that allowing free zone businesses to compete with tax-paying entities would lead to economic disruption.
Francis Meshioye, representing the Manufacturers Association of Nigeria, commended the government for the proposed bills but raised concerns about a lack of incentives for export-oriented manufacturers. He suggested implementing restrictions on the percentage of goods that can be sold in the local market from Export Free Zones, as a measure to maintain fair competition and industry standards globally.
In summary, the recent discussions surrounding Nigeria’s tax reform bills have clarified that the government does not intend to reintroduce inheritance tax despite misunderstandings about current provisions. The ongoing dialogue emphasizes the importance of distinguishing between family income and inheritance while addressing concerns regarding investments in free zones. Ultimately, stakeholders continue to advocate for adjustments that support local manufacturing and competition, reflecting a cautious approach towards fiscal policy reforms.
Original Source: www.zawya.com
