The National Assembly is currently reviewing tax reform bills that could significantly impact the funding of tertiary institutions in Nigeria
President Bola Tinubu is advocating for the passage of these bills as part of his efforts to reform the country’s tax laws. However, the proposed legislation has faced strong opposition, especially from lawmakers in northern Nigeria.
While the debate has largely focused on the new VAT sharing formula, there are other significant issues within the bills that have been overlooked. One key aspect is the proposed review of special tax privileges granted to the National Information Technology Development Fund (NITDF), the National Agency for Science and Engineering Infrastructure (NASENI), and the Tertiary Education Trust Fund (TETFUND).
The Student Loan Fund is expected to be the biggest beneficiary, with all educational development funds allocated to it under the new proposals. The bills suggest a phased removal of taxes currently charged exclusively for these three trust funds.
Currently, companies earning over N100 million are required to pay a 1% levy on their profit before tax for NITDF. For NASENI, a 0.25% levy is applied to commercial companies and firms with turnovers above N100 million in sectors such as banking, telecommunications, ICT, aviation, maritime, and oil and gas. The TETFUND levy is 3% of the assessable profit of registered companies in Nigeria, while NITDF’s is 1%.
Under the new proposal, these tax privileges are set to expire by 2029. Section 59 of the Nigerian Tax Bill seeks to consolidate all development levies into a single 4% tax on profits from 2025 to 2026. From 2027 to 2029, the rate will decrease to 2%, and by 2030, the levies will be eliminated entirely.
The new tax distribution plan allocates 50% of the levy to TETFUND in 2025 and 2026, increasing to 66% from 2027 to 2029, before reducing to 0% in 2030. The Student Loan Fund is set to receive 25% in 2025 and 2026, increasing to 33% between 2027 and 2029, and 100% by 2030. Meanwhile, NITDF and NASENI will no longer benefit from the levy by 2027.
The proposal could significantly affect TETFUND, which received over N800 billion in the 2024 budget. The fund is responsible for financing infrastructure in public tertiary institutions and training lecturers.
On Sunday, Governor Babagana Zulum of Borno State expressed concerns during an interview, claiming that the reforms could lead to the abolition of the three agencies. However, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Reforms, and the Chairman of the Federal Inland Revenue Service (FIRS) have insisted that the agencies will not be scrapped. Instead, they clarified that the government will approve funding directly, rather than relying on statutory transfers.
The tax reforms continue to spark debate, with potential implications for the funding and management of key development sectors in Nigeria.
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