By Oluwaseye Ogunsanya
In a landmark move set to reshape Nigeria’s fiscal future, President Bola Ahmed Tinubu on June 26, 2025, signed into law four major tax reform bills at the Aso Rock Presidential Villa, in the presence of top government officials, including the Senate President and the Speaker of the House of Representatives.
The reforms, the result of months of nationwide consultations and legislative deliberations that generated controversy and outrage among stakeholders, especially northern governors and politicians, are poised to transform Nigeria’s tax system into a more inclusive, efficient, and business-friendly framework.
What are these new tax laws all about?
The reforms aim to harmonize Nigeria’s fragmented tax laws, streamline revenue collection, and boost economic growth. They address long-standing inefficiencies in the tax system that have hindered compliance and revenue performance. According to the presidency, the new tax laws will significantly transform tax administration in the country, leading to increased revenue generation, improved business environment, and a boost in domestic and foreign investments.
The need for a simplified and effective tax system became increasingly urgent amid concerns about low revenue, a cumbersome tax structure, and economic bottlenecks. In response, the federal government launched a reform process spearheaded by the Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms inaugurated in August 2023, which engaged business leaders, tax experts, civil society groups, and policymakers across the country.
In his address to reporters, the Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, stated that the new tax regime would begin on January 1, 2026.
He said, “It takes time for all the stakeholders, participants, operators, and the regulator to change the system.
“So, with the magnanimity of the National Assembly, Mr President assented to the bills. So, the effective date will be January 1, 2026. We have six full months for both sensitisation and planning. This is also considering the fiscal year of the government because when you have this kind of change, it’s not what you do in the media.”
Which bills were signed into law?
Four key pieces of legislation were signed:
- Nigeria Tax Bill (Ease of Doing Business), which aims to consolidate Nigeria’s fragmented tax laws into a harmonised statute. By reducing the multiplicity of taxes and eliminating duplication, the bill will enhance the ease of doing business, reduce taxpayer compliance burdens, and create a more predictable fiscal environment.
- The Nigeria Tax Administration Bill will establish a uniform legal and operational framework for tax administration across federal, state, and local governments.
- The Nigeria Revenue Service (Establishment) Bill repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven national revenue agency—the Nigeria Revenue Service. It also defines the NRS’s expanded mandate, including non-tax revenue collection, and lays out transparency, accountability, and efficiency mechanisms. Similarly, the NRS will now handle revenue collections previously managed by agencies like the Nigeria Customs Service, NUPRC, NPA, and NIMASA.
- The Joint Revenue Board (Establishment) Bill provides for a formal governance structure to facilitate cooperation between revenue authorities at all levels of government. It introduces essential oversight mechanisms, including establishing a Tax Appeal Tribunal and an Office of the Tax Ombudsman.
What are the other details of the law?
- Low-Income Relief: Workers earning ₦800,000 or less annually are now exempt from income tax.
- High-Income Tax: A 25% personal income tax applies only to individuals earning above ₦50 million annually.
- Small Business Exemption: Small business owners are fully exempt from paying income tax.
- Corporate Tax Cut: Starting in 2026, company income tax for medium and large firms will be reduced from 30% to 25%.
- VAT Exemptions on Essentials: There is no VAT on essential items like food, medical services, pharmaceuticals, school fees, and electricity.
- No Tax Hike: VAT remains at 7.5%, and corporate income tax stays at 30%; there has been no increase.
- New Development Levy: A 2%–4% Development Levy will now fund critical national institutions like NELFUND, TETFund, NITDA, and NASENI.
What’s the bigger picture?
These reforms represent a significant shift in Nigeria’s fiscal landscape. By promoting tax fairness, encouraging compliance, and easing the burden on vulnerable groups, the reforms are expected to boost government revenue, support businesses, and foster sustainable economic development.
The reforms also aim to address disparities in tax burdens, particularly for low-income earners and small businesses, ensuring that the tax system is more equitable. As these laws take effect, all eyes will be on how efficiently they are implemented—and whether they deliver on the promise of a more inclusive and growth-oriented economy.
As Nigeria navigates this new tax landscape, the success of these reforms will depend on the government’s ability to manage stakeholder expectations and ensure compliance across all sectors.
