By Alexander Ekemenah
The Chairman of Alliance for Economic Research and Ethics (AREET), Honourable Dele Kelvin Oye, has advocated for proactive measures for convergence of the Nigerian Tax Act 2025 and Islamic Financing.
Oye canvased this this at the recently concluded Al-Habibiyyah 5th National Zakat and Waqf Day held in Guzape, Abuja.
In his address to the Islamic intelligentsia in a paper titled “Synergizing Zakat and Waqf under Nigeria’s Tax Act 2025”, Oye said the “passage of the Nigeria Tax Act 2025 signifies a radical change in the country’s fiscal architecture; shifting from a fragmented, multi-layered tax regime to one that is centralised and digitally integrated”
Oye said that while the Act is intended to streamline revenue mobilisation, increase tax compliance and enhance administrative efficiency, “significant friction is created for faith-based institutions, and particularly those institutions operating in accordance with Islamic finance paradigms.”
Oye then canvassed for a convergence between the Tax Act and the basic pillars of Islamic financing.
“The best opportunity to converge Zakat with the 2025 Tax Act would be adding a “Religious social responsibility” (RSR) credit for individuals and corporations paying Zakat. Much like the models in Malaysia and Pakistan, taxpayers would be allowed to directly deduct their documented Zakat payments from their tax liability. This would create a process of Zakat+, now seen as a national priority – formally recognised as making a contribution to the viability of national development.
Oye clarified that RSR is “a powerful motivator to develop an informal religious economy. To qualify for the RSR credit, the Zakat must be reported to a board that is recognised or regulated by the state in compliance with the 2025bTax Act reporting requirements. This will enable the Zakat committees to use the Cloud Unified Tax Portal, and/or maintain a credible auditing system”
He further said that the implementation of the 2025 Tax Act “could be achieved through the use of a “Faith-State Compact” in partnership with Islamic financial institutions. This approach provides space for important religious institutions such as the Nigerian Supreme Council for Islamic Affairs (NSCIA) and other major religious bodies to facilitate faith-based actors in the process of fiscal reporting obligations to the Nigeria Revenue Service.
“This compact should consider a “faith-tax” liaison office within the NRS to address the unique provisions of Zakat and Waqf. This could also include solutions for “anonymised transparency”.
“This would facilitate the Islamic principles of separate giving while providing for aggregate financial reporting that the state needs. The framework for such collaboration would also help to establish the “public trust” that is non-existent in the Nigerian financial system”
Oye said that it is time for professionalism in Islamic social financing. “Religious institutions should not only turn away from informal “cash-in-the-box” management principles but adopt modern accounting standards, such as provided by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). This has created the “Faith Accountant” model – professionals trained in Shari’ah requirements and the compliance procedures for the Nigeria Tax Act 2025 compliance process.
“The Nigeria Tax Act 2025 is a positive development in terms of a transparent and efficient fiscal future. The effectiveness is dependent on its ability to realise the diverse social and religious realities of the Nigerian people.
In order for it to recognise Zakat and Waqf as a vital form of the social safety net, as opposed to merely an “informal” or as “unregulated”, the state can turn a potential tension into national growth.
“The synergies of “Faith and the Fiscus” is not merely legal, but moral for a nation that seeks to strive for a just and prosperous society”, Oye concluded.
