Adebayo Adenrele
The Chairman of Presidential Committee on Fiscal Reform and Tax Reform, Taiwo Oyedele has clarified that there will be no imposition of inheritance tax in the new tax reform bill.
He noted that the Inheritance tax has been abolished in 1996 when the Capital Transfer Tax Decree was abrogated.
Oyedele stated this while clarifying some issues emanating from the ongoing debate on the tax reform bills.
His words,” Some people have expressed the view that the tax reform bills seek to impose a tax on inheritance. Is this true?
“No. There is no such provision contained in the tax reform bills, either directly or indirectly. Inheritance tax was abolished in Nigeria in 1996 when the Capital Transfer Tax Decree was abrogated”.
Speaking on the essence on its provision, “What then is the essence of this provision under section 4(3) of the Nigeria Tax Bill – “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 cannot be separately determined.
“Inheritance is a one-time wealth transfer as a gift during the lifetime of the giver or at death. Unlike inheritance tax which is applicable once, the family income covered under the tax bills is expected to recur from time to time.
“Section 4 of the Nigeria Tax Bill stipulates all incomes that are chargeable to tax. Section 4(3) covers taxable income earned by a family, not their inheritance. This is a standard provision under imposition of income tax which has always been in our tax laws. Currently, it is provided for under section 2(5) of the Personal Income Tax Act LFN 2004 as amended, viz:
“In the case of income of a family recognised under any law or custom in Nigeria as families 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.
“If an individual earns an income, they will be taxed accordingly. Where a group of individuals such as a partnership, community, or family jointly earn a taxable income, they cannot be exempted just because they operate as a group of persons. 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”.