Proposed Tax Reforms Threaten Funding for Nigerian Tertiary Institutions and Key Development Agencies

The tax reform bills currently under consideration in Nigeria’s National Assembly propose significant changes that could reshape the funding of tertiary institutions, according to a review by the Daily Post.

President Bola Tinubu is championing the passage of these bills as part of broader efforts to overhaul the country’s tax laws. However, the proposals face strong resistance, particularly from northern stakeholders and within the legislature.

While much of the debate has centered on the proposed changes to the Value Added Tax (VAT) sharing formula, other critical aspects have gone largely unnoticed. An analysis by *DAILY POST* reveals that the bills aim to revise tax privileges for three key funds: the National Information Technology Development Fund (NITDF), the National Agency for Science and Engineering Infrastructure (NASENI) Fund, and the Tertiary Education Trust Fund (TETFUND). A major beneficiary of the reforms is set to be the Student Loan Fund, which is positioned to receive all educational development funds under the new framework.

Under current laws, the NITDF levy is 1% of the profit before tax (PBT) of companies earning above ₦100 million annually. NASENI collects 0.25% of PBT from businesses in sectors such as banking, telecommunications, ICT, aviation, maritime, and oil and gas, while TETFUND’s tertiary education tax is set at 3% of the assessable profit of Nigerian-registered companies. These levies, managed by the Federal Inland Revenue Service (FIRS), provide critical funding for the respective agencies.

The proposed reforms aim to phase out these levies entirely by 2030. Section 59 of the Nigerian Tax Bill consolidates these development levies into a single levy of 4% on eligible entities’ profits for 2025 and 2026, reducing to 2% from 2027 to 2029, and eventually ending in 2030. The revenue-sharing formula outlines a gradual shift, with TETFUND initially receiving 50% of the levy in 2025-2026, rising to 66% between 2027 and 2029, before dropping to 0% in 2030. Simultaneously, the Student Loan Fund will grow its share from 25% in 2025 to 100% by 2030, while NITDF and NASENI are excluded from the levy starting in 2027.

This transition poses a significant challenge for TETFUND, which received over ₦800 billion in the 2024 budget and plays a vital role in supporting infrastructure and training in public tertiary institutions. Critics, including Governor Babagana Zulum of Borno State, have voiced concerns that the reforms could effectively dismantle the three agencies. In a recent interview, Zulum described the bills as a threat to their survival.

In response, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Reforms, and the FIRS Chairman have refuted these claims, assuring that the agencies will not be scrapped. Instead, they argue, the government will allocate funding to the agencies directly, eliminating the need for statutory transfers.

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