The chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has clarified that the recently proposed tax reform bills do not include any provision for an inheritance tax.
He made this disclosure via his X (formerly Twitter) handle, dispelling speculation about such a tax in Nigeria’s fiscal policy.
According to Oyedele, the inheritance tax was abolished in Nigeria in 1996 following the abrogation of the Capital Transfer Tax Decree.
He explained that inheritance represents a one-time transfer of wealth, either as a gift during the giver’s lifetime or upon their death, and differs fundamentally from recurring income subject to taxation under the proposed tax reforms.
“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 highlighted the provisions of Section 4 of the Nigeria Tax Bill, which defines taxable income. Section 4(3), in particular, addresses taxable income earned by families, stressing that inheritance itself is not taxable under the bill. This approach aligns with existing tax laws, including Section 2(5) of the Personal Income Tax Act (LFN 2004 as amended).
Oyedele elaborated on the taxation of family income, noting that “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.”
He also explained that individual earnings are subject to tax, and when groups such as partnerships, communities, or families earn taxable income collectively, they cannot claim exemption simply because they operate as a group.
“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,” Oyedele said.
The clarification reinforces the government’s commitment to maintaining transparency and equity in Nigeria’s tax system, while also addressing misconceptions about the scope and implications of the proposed tax reforms