Kehinde Fajobi
Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reform Committee, has clarified that the proposed tax reform bills do not include an inheritance tax.
He made this clarification through his X (formerly Twitter) account, addressing concerns that the bills might introduce such a tax in Nigeria.
Oyedele reminded the public that inheritance tax was abolished in Nigeria in 1996 with the repeal of the Capital Transfer Tax Decree.
He explained that inheritance, which is a one-time transfer of wealth, differs from recurring income that is subject to taxation under the new tax proposals.
“Inheritance tax is a one-time wealth transfer. Unlike inheritance tax, family income covered under the tax bills is expected to recur from time to time,” Oyedele stated.
He further referred to Section 4 of the Nigeria Tax Bill, which defines taxable income.
Section 4(3) specifically addresses taxable income earned by families and makes clear that inheritance is not taxable under the bill, aligning with existing tax laws like Section 2(5) of the Personal Income Tax Act (LFN 2004 as amended).
Oyedele also discussed the taxation of family income, emphasising that income shared within families with uncertain or indeterminate individual interests would be taxed based on the residence of the member who customarily receives the income.
He added, “In the case of income of a family recognised under any law or custom in Nigeria as family 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.”
On the issue of group income, Oyedele explained that individual earnings are taxable, and income from groups like partnerships or families will be taxed collectively unless individual shares can be determined.
“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,” he stated.
Oyedele’s clarification underscores the government’s commitment to transparency and fairness in Nigeria’s tax system while addressing misconceptions surrounding the proposed reforms.