… To take effect January 1, 2026
… Experts raise implementation concerns in states
President Bola Tinubu on Thursday signed Nigeria’s four boldest tax bills into law.
Analysts say these tax laws will renew investor confidence in the Nigerian economy, unlock billions of naira in revenue while protecting small businesses and workers.
Zacch Adedeji, special adviser to the president on revenue and chairman of the Nigeria Revenue Service (NRS), said these laws will take effect on January 1, 2026, signalling a new tax regime for Nigeria.
The bills signed into law by the President Tinubu included: the Nigeria Tax Bill 2024, which aims to provide unified fiscal legislation governing taxation in Nigeria; and the Nigeria Tax Administration Bill 2024, which is expected to provide a clear and concise legal framework for fair, consistent and efficient administration of all tax laws in Nigeria.
The Nigeria Revenue Service (Establishment) Bill 2024, which is third in the series, was also signed into law. It was initiated to repeal the Federal Inland Revenue Service Establishment Act No. 13, 2007 and establish the Nigeria Revenue Service (NRS), empowering it to assess, collect, and account for revenue accruable to the Federal Government of Nigeria (FGN). The fourth bill was the Joint Revenue Board of Nigeria (Establishment) Bill 2024, which seeks to establish the Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombudsman for the harmonisation, coordination and settlement of disputes arising from revenue administration in Nigeria.
The bills repealed about 12 principal and/or subsidiary legislations, while amending 15 other principal/subsidiary tax legislations.
Read also: New tax laws take effect January 1, 2026 — FG
What they mean for Nigerians, businesses
Nigerians could see lower tax bills, cheaper essential goods, and new business incentives and investments under the tax laws.
Paul Alajeh, an economist, described the laws as “a landmark effort to reposition Nigeria’s tax administration,” noting that the potential benefits include stable revenue generation, improved social equity, tax clarity and reduced compliance costs, which far outweigh the constraints.
Alajeh explained that the measures could boost investor confidence and curb leakages within the system.
For the average Nigerian, one of the most immediate benefits is tax exemption for low-income earners. Workers earning N800, 000 annually and below will be exempted from taxes. Prior to this, Nigerians who earned as low as 300,000 year paid up to 7 percent income tax.
According to the Nigerian Financial Services Market Report, only 10 percent of Nigerians earn above N100,000 monthly.
Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, stated that the reforms will reduce the tax burden on 90 percent of Nigerian workers, including 30 percent of Nigerians earning between N50,000 and N70,000 .
Another anticipated relief for individuals and households is the zero value added tax (VAT) on over 20 essential goods and services provided in sections 187-188.
They include: baby products, locally manufactured sanitary pads, towels, and tampons, military hardware including arms, and locally manufactured uniforms for armed forces and para-military agencies, including household CNG.
They also include services such as road transport services, healthcare, education, electricity generation and transmission.
According to the Policy and Legal Advocacy Centre (PLAC), this provision will provide relief for low-income households that spend nearly 100 percent of their income on these necessities.
Read also: New tax law changes FIRS to Nigeria Revenue Service, NRS
Boost for businesses
For Nigeria’s business community, particularly micro, small and medium-sized enterprises (MSMEs), experts believe the reforms represent a major shift.
More than 50 ‘nuisance taxes’ have been scrapped and harmonised into a streamlined framework aimed at reducing compliance costs and improving ease of doing business.
Adewale-Smatt Oyerinde, director-General of the Nigeria Employers’ Consultative Association (NECA), described the signing of the reforms as uhuru, noting that the harmonisation of multiple taxes and levies will solve a lot of problems for businesses and individuals.
“If those multiple taxes are resolved, it makes a lot of sense for us. By research done by PwC, you have people paying over 90 different tax levies and fees, both legal and illegal. Nobody survives that kind of environment. So, if that is the only reform done for us, I think it’s a good way to start,” he said.
The redefinition of ‘small companies’ under Section 203 of the tax bill provides further relief. Businesses with a turnover of up to N50 million and fixed assets not exceeding N250 million will be exempted from company income tax, enjoy a zero percent withholding tax on business income, and will no longer be required to deduct and remit withholding tax on payments to vendors.
The laws also prohibit cash payments at roadblocks and other informal tax collection methods, which have long been criticised for stifling small-scales.
Under the VAT reforms, businesses, particularly MSMEs, will be granted tax credit for VAT paid on their assets and all expenses incurred to produce ‘vatable’ goods and services. This change alone is expected to lower the cost of production by up to 7.5 percent, according to PLAC, and should reduce retail prices while improving profit margins.
Samuel Nzekwe, a financial expert, described the increase in the threshold of people who will not pay tax as ‘very good.’
Nzekwe said it will give MSMEs leverage to plough back taxes they would have paid into their business.
“It’s going to be very good tax reforms as everything is harmonised. I think it is a very good document,” he said, stressing that “implementation is key, and should start immediately.”
Furthermore, agricultural businesses are set to benefit from a five-year tax holiday for select sub-sectors, including dairy, livestock, forestry, animal feed, and cocoa processing. In addition, VAT is now waived on the purchase and hire of agricultural machinery and equipment.
Relief for housing
The reforms provide extensive tax incentives aimed at lowering housing costs. If implemented, real estate transactions, including sales and rental income, are now exempt from VAT. Stamp duties will not apply to rents below N10 million per month, while capital gains tax will no longer apply to the sale of dwelling houses.
According to Oyedele, these exemptions are expected to lower the cost of building materials and housing in general. The production of non-metallic building materials has also been listed for priority tax incentives.
To encourage job creation, the law introduces tax incentives for employers to hire more workers. It provides that compensation for loss of employment or other personal/professional injuries up to N50 million will be exempt from capital gains tax (CGT), an increase from the previous N10 million threshold.
To address longstanding concerns about inefficiencies in tax administration, a new Office of the Tax Ombudsman will be created to protect taxpayers’ rights and ensure fair treatment.
Controversial taxes expunged
In response to public backlash, the law does not include the proposed hike in VAT from 7.5 percent to 15 percent by 2030. It also removes the Excise Duties and Digital Economy Regulation Excise duty provisions, particularly those related to telecoms and forex transactions, as they were seen as potentially inflationary and job-threatening.
Implementation challenges
In spite of these glowing attributes, Oyerinde of NECA said governments at all levels must commit to implementation for Nigerians to reap the benefits.
Alajeh also highlighted implementation constraints for states and micro businesses. He said states and local governments are still lagging in digital infrastructure.
