FEC vs NEC: What does Zaccheus Adedeji of FIRS want?, By Yushau A. Shuaib

Chairman of the Federal Inland Revenue Service (FIRS), Zaccheus Adedeji [PHOTO CREDIT@Daily Nigerian]

Adedeji articulated the reforms’ goals, emphasising the need to harmonise existing tax laws, streamline administration, and align Nigeria’s tax system with global standards. He conveyed that the reforms aim to consolidate disparate tax laws and enhance transparency, while improving efficiency in revenue collection. He highlighted that these changes would modernise Nigeria’s tax system, adapt to the realities of the digital economy, and position the country attractively for investment.

The recent submission of four executive bills to the National Assembly by President Bola Tinubu has sparked intense debate. Central to the controversy is Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS), whose clarifications on the reforms are yet to clear the air but has intensified discussions.

At first glance, the four bills appear to serve distinct purposes: The Nigeria Tax Bill seeks to harmonise various tax laws to reduce their multiplicity; the Nigeria Tax Administration Bill focuses on standardising tax processes and compliance requirements; the Nigeria Revenue Service Bill aims to replace the FIRS Act and establish a National Revenue Service (NRS) to be responsible for collecting both domestic and international revenues; and the Joint Revenue Board Bill, which seeks to create a framework for resolving revenue conflicts between states and local governments.

A key aspect of these proposals involves replacing the FIRS with the NRS, which would become a central and the most powerful revenue service in the history of Nigeria, with the task of being the only agency responsible for collecting all government revenues, including those currently managed by other agencies in oil, customs, and port and other sectors. It will be more powerful and influential than the Central Bank of Nigeria (CBN) and Nigeria National Petroleum Company Limited (NNPCL), and others.

A contentious point is the proposed Value Added Tax (VAT) distribution model. Under the new framework, states receiving VAT collections would retain significant revenue from these. However, some Northern leaders fear that this model will disproportionately benefit states where companies are headquartered, rather than those where goods and services are consumed.

In a statement by Alhaji Muhammad Inuwa Yahaya, the Gombe State governor and chairman of the Northern Governors Forum, Northern governors oppose the proposed derivation-based VAT distribution model, citing concerns that it would be disadvantageous to their states.

They urged the National Assembly members to reject any proposed law perceived as unfavourable to any region of the country. The group’s communiqué states that: “The Forum is concerned by the recent Tax Reform Bill sent to the National Assembly, especially the proposed shift to a derivation-based VAT distribution model, which disadvantages the North.”

Tinubu remains committed to reforming Nigeria’s tax system. Through these proposed bills, the government aims to streamline tax administration, enhance efficiency, and align with global best practices. The bills — the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board Establishment Bill — seek to unify tax processes, reduce overlapping responsibilities, and simplify compliance for both businesses and individuals.

The governors reaffirmed their commitment to national development, while emphasising the need for equity in policy implementation to prevent any geopolitical zone from feeling marginalised.

Consequently, the following day, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, recommended that President Tinubu should withdraw the Tax Reform Bills from the National Assembly. The NEC convened its 144th meeting at the State House in Abuja, where state governors and Federal Executive Council members, including Finance Minister Wale Edun and Budget and National Planning Minister Abubakar Bagudu, participated.

Oyo State Governor Seyi Makinde remarked that the council recognised the necessity of further understanding and aligning the bills, emphasising that more comprehensive consultation would be in the nation’s best interest.

Despite this recommendation by Nigerian governors and federal cabinet members in the NEC, President Tinubu asserted that he would not withdraw the proposed tax reform bills. His spokesperson, Bayo Onanuga, indicated that the president believes the legislative process should continue, allowing room for input and adjustments through public hearings.

Tinubu remains committed to reforming Nigeria’s tax system. Through these proposed bills, the government aims to streamline tax administration, enhance efficiency, and align with global best practices. The bills — the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board Establishment Bill — seek to unify tax processes, reduce overlapping responsibilities, and simplify compliance for both businesses and individuals.

It is widely believed that Zacch Adedeji, as the executive chairman of the Federal Inland Revenue Service (FIRS), is the driving force behind these reform proposals. His educational background, prior positions, and current role have established him as one of the most influential figures in Tinubu’s administration.

The contradictory stance of FEC and NEC is indeed puzzling, especially considering that the All Progressives Congress (APC) controls governance at the national and state levels. A unified and diplomatic approach would have been more effective in addressing the tax reform proposals, unless the drama was a deliberate script for political purposes.

Born on 8 January, 1978, in Ogbomoso, Oyo State, Adedeji graduated with first-class honours in Accountancy from Obafemi Awolowo University (OAU), Ile-Ife, where he also obtained his Master’s and PhD in the same field. He began his professional journey at Procter & Gamble (P&G) as corporate finance manager for West Africa and later as finance leader for SAP Implementation. He also served as finance commissioner in Oyo State under Governor Isiaka Ajimobi (2011–2015). He was appointed executive secretary of the National Sugar Development Council (NSDC) by President Muhammadu Buhari, before becoming the executive chairman of FIRS under President Tinubu.

While his political ambition is fuzzy, having avoided any major controversy, some suspect his positions on tax reform and the proposed legislation harbour hidden agendas. In light of these concerns, he proactively engaged with members of the National Assembly following the submission of the bills. He addressed both the Senate Committee on Finance, chaired by Senator Sani Musa, and the House of Representatives Committee, led by Honourable James Faleke.

Adedeji articulated the reforms’ goals, emphasising the need to harmonise existing tax laws, streamline administration, and align Nigeria’s tax system with global standards. He conveyed that the reforms aim to consolidate disparate tax laws and enhance transparency, while improving efficiency in revenue collection. He highlighted that these changes would modernise Nigeria’s tax system, adapt to the realities of the digital economy, and position the country attractively for investment. He confirmed that no additional taxes would be introduced, thereby aligning with President Tinubu’s commitment to “not taxing poverty and inflation.”

However, until the full details of the bills are made public, speculation will undoubtedly continue. The discrepancy between President Tinubu’s stance and Vice President Shettima-led NEC’s recommendation only adds to the confusion.

The contradictory stance of FEC and NEC is indeed puzzling, especially considering that the All Progressives Congress (APC) controls governance at the national and state levels. A unified and diplomatic approach would have been more effective in addressing the tax reform proposals, unless the drama was a deliberate script for political purposes.

As the debate continues, Adedeji’s true intentions and the broader impact of these reforms on Nigeria’s economy remain in question. The outcome will undoubtedly shape the nation’s economic trajectory.

Yushau A. Shuaib is the publisher of PRNigeria and Economic Confidential. yashuaib@yashuaib.com