Inheritance Tax Not Reintroduced in New Tax Bills – Oyedele Clarifies Misconceptions
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has categorically dismissed claims that inheritance tax has been reintroduced in the latest tax reform bills before the National Assembly. His clarification came during a House of Representatives Committee on Finance hearing on four tax reform bills, amid concerns that the controversial tax had been subtly reinstated.
Misinterpretation of Tax Provisions
Addressing lawmakers and stakeholders, Oyedele refuted allegations that inheritance tax was making a comeback, pointing out that the section of the bill under scrutiny—Section 4(3)—pertains to family income, not inheritance.
“If an individual owns a property and rents it out, they pay tax on the rental income. Similarly, if a family owns a property and leases it, they must also pay tax. Otherwise, every property in Nigeria would be converted into a ‘family house’ to evade taxation,” Oyedele argued.
He emphasized that inheritance deals with assets, wealth, and cash transfers, whereas income is external revenue, and that the concept of family income taxation is not new, having been embedded in Nigeria’s tax laws since independence.
He further highlighted that existing tax laws—such as the Personal Income Tax Act (Section 2(5))—already account for family income taxation, which applies when rental income cannot be directly attributed to any individual within a family.
“In fact, even villages and communities that generate rental income from assets such as town halls are subject to taxation. This is not a novel imposition,” Oyedele clarified.
Inheritance Tax: A Repealed Law, Not a Reinstated One
Oyedele also reminded stakeholders that inheritance tax was separately introduced in 1979 by the military but was repealed in 1996 under the Capital Transfer Tax Act. He insisted there was no attempt—explicitly or implicitly—to reintroduce it.
“This revenue belongs to the states, not the federal government. There is no incentive or justification for us to bring back inheritance tax,” he asserted.
FIRS Chairman Condemns Free Zone Tax Evasion
Meanwhile, the Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji, raised concerns over tax abuses in free trade zones. He criticized the practice where investors manufacture goods in these zones under different tax regulations and then introduce them into Customs territory without proper taxation.
“No responsible government will stand by and allow investors to distort the economy by avoiding taxes. You cannot produce tax-free in a free zone and then flood the local market, harming manufacturers who contribute tax revenues,” Adedeji said.
Manufacturers Raise Alarm Over Export Incentives
In a related development, the President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, expressed dismay that the new Tax Bill fails to provide waivers for profits generated from manufactured exports.
According to him, the value of manufactured exports plummeted from $6.7 billion in 2019 to a mere $1.6 billion in 2023 due to insufficient incentives. While commending the government for its tax reform efforts, Meshioye warned that failure to incentivize exporters could further cripple the sector.
He also objected to the unrestricted sale of goods produced in Export Free Zones into the local market, arguing that such policies undermine domestic manufacturers who operate under conventional tax structures.
“No country except Nigeria allows 100% sale into the domestic market from free zones. Ghana, for instance, permits only 30%. We propose that Nigeria caps such sales at 25% to prevent economic distortions,” Meshioye suggested.
The ongoing tax reform debate highlights significant policy concerns, from misconceptions about inheritance tax to the broader implications for businesses operating in free trade zones. While Oyedele has attempted to put fears of inheritance tax to rest, issues surrounding tax incentives for manufacturers and free zone abuses remain contentious. As the National Assembly deliberates these bills, the challenge will be balancing revenue generation with fostering a competitive economic environment.
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Inheritance Tax Not Reintroduced in New Tax Bills – Oyedele Clarifies Misconceptions