President Bola Ahmed Tinubu has signed four new finance bills into law to overhaul Nigeria’s tax system, aiming to reduce burdens on ordinary citizens and businesses while making tax collection more efficient.
What changed?
The government introduced four key laws:
- Nigeria Tax Act – Combines many overlapping taxes into one simple code, eliminating over 50 minor taxes.
- Tax Administration Act – Sets unified rules for collecting taxes across all government levels.
- Nigeria Revenue Service Act – Replaces the FIRS with a new, independent body: the Nigeria Revenue Service (NRS).
- Joint Revenue Board Act – Coordinates tax efforts between federal, state, and local governments, and introduces a Tax Ombudsman and Tax Appeal Tribunal to settle disputes.
Who benefits?
- Low-income earners:
Anyone earning up to ₦1 million per year will get a ₦200,000 rent relief, reducing their taxable income and exempting them from income tax. - Families:
Essentials like food, healthcare, baby items, education, rent, and electricity will now be VAT-free. - Small businesses:
Those earning less than ₦50 million annually won’t pay company income tax anymore and can file simpler tax returns. - Large companies:
Corporate tax will drop to 27.5% in 2025 and then to 25%, plus they’ll get refunds for VAT paid on expenses. - Charities and co-ops:
Non-profits, educational, religious, and cooperative organisations will get tax breaks—if they don’t earn money from business activities.
Who pays more?
- High-income individuals and luxury buyers:
Expect higher VAT on luxury goods and a capital gains tax on large stock sales.
Why it matters
Nigeria’s tax system has long been complex and inefficient, with too many taxes hurting low-income earners and discouraging business growth. With a very low tax-to-GDP ratio (just over 10%), Tinubu’s administration hopes to raise it to 18% by 2026—without increasing taxes on basic goods.
The reforms aim to:
- Make tax compliance easier
- Reduce pressure on the poor
- Raise funds for infrastructure, education, and healthcare
