Tax Reform Bills: Sharia Council, FCT Imams, Kano Govt, Yadudu Reject VAT Rise, Others

The Supreme Council for Shariah in Nigeria, Committee of FCT Imams Initiative, Kano State Government, and former Presidential Adviser Professor Auwalu Yadudu have raised concern about the proposed law on inheritance, saying it will infringe on the religious rights of Christians and Muslims.

The stakeholders disclosed this on Wednesday during their various presentations at the House of Representatives Public Hearing on Tax Reform Bills convened by the House Committee on Finance at the National Assembly Complex in Abuja.

The four bills are The Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, the Joint Revenue Board Bill, and the Nigeria Tax Bill, which have been passed for a second reading by both the Senate and the House of Representatives.

In its presentation, the Sharia council, represented by Professor Ahmed Bello Dogarawa, acknowledged the importance of tax reforms but strongly opposed the proposed inheritance tax, stating that it conflicts with Islamic law and religious practices.

He said, “While we appreciate efforts to streamline tax laws, we cannot support a provision that contradicts deeply held religious principles. Taxing inheritance in this manner would create unnecessary tension and legal challenges.”

The council also called for modifying the inheritance tax clause and expunging Section 4(3), Part 1, Chapter 2 of the Nigeria Tax Bill.

“The new clause should read as either of the following: “In this section, the reference to family income or, however, called, shall not affect the operation of distribution of the estate under the Personal Law of the deceased.

The council also raised concerns over removing tax exemptions for religious institutions, warning that it could hamper their ability to provide community services.

“Any attempt to tax inheritance would be seen as an infringement on religious rights and could create legal disputes,” he said.

He added that if the federal government insists on maintaining inheritance tax, the bill should be amended to explicitly state that it does not apply to estates distributed under personal law (Sharia law, among others).

The council said the term “derivation” in the bill was vague and ambiguous, saying it must be adequately defined.

Professor Dogarawa said that derivation should be explicitly defined as the location where actual consumption occurs.

In its presentation, the FCT imam committee, represented by Dr Umar Aliyu, the Imam of Banex Mosque Abuja, said his association strongly opposed any form of taxation on religious institutions and faith-based organisations.

He said religious institutions play a crucial role in community development and welfare; therefore, imposing taxes on mosques and religious centres would create financial hardships and discourage charitable activities.

Like the Sharia council, the imams also opposed VAT increment but proposed reducing the VAT rate from 7.5% to 5% or, at best, maintaining the current rate of 7.5%.

The association also proposed expunging from the bills the clause seeking to stop the funding of TETFund, NASENI, and NITDA by 2030.

The clerics also opposed the development levy, arguing that it would place unnecessary financial strain on religious institutions already playing a key role in supporting the needy.

Representatives from the Kano State Government also voiced their general support for tax reforms but cautioned that certain sections would undermine state autonomy.

“We support tax modernisation,” one official said, “but we must ensure that this process does not come at the expense of states’ constitutional rights and economic stability,” Mahmud Sagagi, who made the presentation, said.

Yadudu, a constitutional law professor, said the ‘supremacy clause’ and the repeated use of “notwithstanding” in the bills would undermine the supremacy of the Nigerian constitution.

“The act or the proposed bill is given the supremacy status like the Constitution. Only the Nigerian Constitution has supremacy, and therefore, if you were to enact any of these bills and you enact them on the basis that they are supreme over any other law which would contradict them, then that would be wrong, and that would be contrary to the Constitution,” he said.

He also observed that it is constitutionally wrong for the National Assembly to create tax boards for states and local governments as proposed in the bills.

Yadudu said the proposed Nigerian Revenue Service board should consist of representatives from the 36 states and the FCT to make it genuinely federal.

He said, “In the boards that you have established, I think it is the tax administration, you are establishing a board, a management board, giving the name National Revenue Service, but having members who are only ex-officials, mainly with the chairman of the board and six representatives of geopolitical thoughts.

“I think this goes contrary to the federal character of this nation in that you either call it Federal Revenue Service Board, in which case you can have any number of ex-officials of your members or if you want to make it truly federal, then you should have each state represented on that board. My preference is that it will be federal.”