Sharia Council Rejects Tech-Driven Tax Collection as Stakeholders Push for Reform Bills

Panel Walks Out Kyari for Failing to Submit Presentation

As the National Assembly considers tax reform bills, the Kano State Government has cautioned against violating the Federal Character principle enshrined in the Constitution.

Similarly, the Supreme Council for Sharia in Nigeria (SCSN) has called for the postponement of technology-driven tax collection measures proposed in the bill, arguing that Nigeria is not yet ready for such a transition.

Meanwhile, Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, was walked out of a public hearing yesterday for failing to submit his updated presentation.

Concerns Over Federal Character and Sharia Compliance

Speaking on behalf of Kano State, Prof. Auwalu Yadudu presented concerns to the Sen. James Faleke-led committee, arguing that the proposal to appoint six representatives from the country’s six geopolitical zones would deny the 36 states and the Federal Capital Territory (FCT) direct representation on the proposed National Revenue Service Board (NRSB).

Yadudu, a law professor at Bayero University Kano (BUK), also questioned the legality of establishing revenue service boards for states and local governments nationwide. He insisted that Islam does not permit taxing properties inherited by Muslims from deceased relatives, emphasizing that Section 275 of the Constitution allows state governments to administer their citizens based on Sharia Law. According to him, such discretionary powers should be left to state governments.

SCSN Opposes Digital Tax Collection

Representing the SCSN, Ahmed Dogarawa, a lecturer at Ahmadu Bello University (ABU), Zaria, warned that the proposed fiscalisation measures would impose undue burdens on taxpayers.

He argued that the Nigeria Tax Administration Bill mandates the use of advanced technology for tax assessment and collection, referencing Sections 23, 69, and 98 of the bill. He cautioned that rushing into digital tax collection could negatively impact average Nigerians, many of whom lack the technical skills to comply with digital Value-Added Tax (VAT) returns.

Dogarawa cited similar challenges in Lagos State, where digital tax experiments raised concerns over data credibility and administrative complexities. The council, therefore, recommended either deleting the fiscalisation provisions or implementing a moratorium of five to ten years to allow the Federal Inland Revenue Service (FIRS) and other relevant agencies to build the necessary capacity.

Drama as NNPCL GCEO Is Walked Out

A brief drama unfolded during the hearing when Faleke invited Kyari to present NNPCL’s position. Kyari took the podium and began his address, but Faleke interrupted, asking whether the updated proposal had been submitted. Kyari admitted it was not yet ready but would be submitted later.

However, Faleke rejected this explanation, stating that Kyari could only make his presentation after submitting the required documents. With no room for negotiation, Kyari was asked to leave and exited the venue.

NLNG Calls for Tax Exemptions on Exports

While expressing support for the tax bill, the Nigeria Liquefied Natural Gas (NLNG) company urged lawmakers to consider making Nigerian exports zero-rated to enhance global competitiveness.

Clement Okoro, NLNG’s Manager for Tax and Financial Systems, argued that since contract agreements are already subjected to VAT, the same approach should be applied to stamp duty to prevent double taxation. He also called for the inclusion of Section 231 of the Company Income Tax (CIT), which grants tax waivers, to attract foreign investment and foreign exchange.

Lawmakers Push for Urgent Tax Reforms

Speaker of the House of Representatives, Tajudeen Abbas, decried Nigeria’s low tax-to-GDP ratio of six percent, despite being Africa’s largest economy. Represented by House Leader Julius Ihonvhere, Abbas emphasized the need for reforms to reduce reliance on debt financing and ensure fiscal stability.

Chairman of the Senate Committee, Faleke (APC-Lagos), highlighted data from the International Monetary Fund (IMF), showing Nigeria’s tax-to-GDP ratio at approximately 9.4 percent in 2023—significantly lower than South Africa’s 21.6 percent, Senegal’s 19.1 percent, and Kenya’s 14.1 percent.

He noted that in 2023, total tax revenue collected by federal, state, and local governments amounted to ₦26.03 trillion. However, the Joint Tax Board (JTB) revealed that only about 35 million Nigerians pay taxes, and just nine percent of registered companies are within the tax net.

With ongoing debates and opposition to certain provisions, stakeholders continue to push for balanced reforms that ensure fairness, compliance, and economic stability.