President Bola Ahmed Tinubu on Thursday signed the four tax reform bills recently passed by the National Assembly, retaining Value Added Tax (VAT) at 7.5% and the Corporate Income Tax (CIT) at 30% without any increment.
The bills are the Nigeria Tax Bill (Ease of Doing Business), which aims to consolidate Nigeria’s fragmented tax laws into a harmonised statute; and Nigeria Tax Administration Bill, which will establish a uniform legal and operational framework for tax administration across federal, state, and local governments.
Others are the Nigeria Revenue Service (Establishment) Bill, which repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven national revenue agency— the Nigeria Revenue Service (NRS); and the Joint Revenue Board (Establishment) Bill, which provides for a formal governance structure to facilitate cooperation between revenue authorities at all levels of government.
There were concerns over the potential of the Bills in further increasing taxpayers’ burden even as the planned increase in value added tax from the present 7.5 per cent also generated concerns.
At the signing ceremony at the State House, President Tinubu said that the occasion presented a new lease of life to every Nigerian and future generation and described the laws as pivotal to the success of the administration’s reforms and the country’s prosperity.
“What we did a few minutes ago is the way forward for our country’s prosperity. Leadership must help people take off, lead the way, and navigate every turn and twist. We must help them reach their destination. That is what we are doing.
“We are in transit; we have changed the roads, we have changed some of the misgivings, we have opened the doors to a new economy, business opportunities. We have shown the world that Nigeria is ready and open for business,” the president stated.
President Tinubu commended the leaders and members of the National Assembly for passing the bills despite initial misunderstandings.
“It was initially difficult, but not all roads will be easy in nation-building. What you have provided is leadership and courage in the face of mounting disputes. Nowhere in the world would tax reforms be easy,” the president said.
Implementation begins in January – Adedeji
Addressing State House correspondents shortly after the president signed the bills, Chairman of the Nigeria Revenue Service, Zach Adedeji, disclosed that the implementation of the newly signed four tax fiscal reform laws will commence by January 1st, 2026.
According to him, the modalities will be put in place ahead of the implementation.
Adedeji explained that the six-month period between the enactment of the new fiscal laws is designed to give ample time to those saddled with the implementation to carefully prepare and ensure that all Nigerians are adequately sensitised.
According to Adedeji, the Federal Inland Revenue Service, FIRS by the signing of the bills into Law is now the Nigeria Revenue Service, explaining that the new law now defines the NRS’s expanded mandate, including non-tax revenue collection, and lays out transparency, accountability, and efficiency mechanisms.
“The Nigeria Revenue Service (Establishment) Bill, the third bill, repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven National Revenue Agency.
“Two hours ago, before we were FIRS, now we are Nigeria Revenue Service with expanded scope to focus on tax collection and with match efficiency.”
The Chairman, Presidential Committee on Tax Reforms, Taiwo Oyedele, said President Tinubu had directed proper implementation of the laws while ensuring collective participation of all stakeholders.
“We are prepared. It is not something we can do alone, even from the government side. It’s something we have to be collective about.”
Oyedele added that the committee will now include the private sector, public sector, civil society, professional bodies as well as international partners.
“The private sector, public sector, civil society, professional bodies, etc? Tax consultants, everyone, including our international partners, who mean well will work for Nigeria.”
During an interview on Channels Television on Thursday, Oyedele said households earning N250,000 or less per month will be exempted from paying tax under the new fiscal laws.
Oyedele explained that the new laws are aimed at driving economic growth and easing the financial burden on low-income earners.
He also said that the reforms are structured to protect struggling families, encourage productivity, and reduce the stress on middle-income earners, while making the wealthy contribute a bit more.
He said the intention is not to increase taxes but to make the system more efficient, fair, and targeted.
“This tax law will not give you cash in your pocket, but at least it won’t take your cash away if you are poor,” he said.
He added that no Nigerian who earns below N250,000 monthly would be required to pay taxes because “they don’t even have enough” to meet basic needs.
Highlights of the new laws
Prior to the passage of the Bills and the presidential assent, there has been an uneasy calm over the four tax proposals particularly on the potential of the Bills in increasing taxpayers’ burden.
However, according to the laws, VAT remains at 7.5%, and corporate income tax stays at 30% without any increment.
Also, the laws provide VAT exemptions on essential goods and services consumed by the poor, including food items, medical services, pharmaceuticals, educational fees, and electricity.
Other highlights include that the Federal Inland Revenue Service (FIRS) has now become Nigeria Revenue Service (NRS).
NRS is expected to act as an autonomous revenue collection agency responsible for collecting revenues of other agencies such as the Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Nigeria Ports Authority (NPA), among others.
Also, 25% personal income tax applies only to individuals earning above N50 million annually while small businesses owners are exempted from paying income tax.
Company income tax for medium and large companies will be reduced from 30% to 25% starting in 2026.
Meanwhile, economic experts and analysts have weighed in on the new tax bills assented to by President Tinubu on Thursday, calling on the federal government to muster the political will to implement the laws.
Experts and stakeholders expressed divergent views over the tax Bills.
‘VAT increase may affect cost of commodities’
Speaking on the issue, a senior partner at SPM Professionals, Paul Alaje noted that the provision of the Law to further increase VAT may affect cost of commodities and purchasing power as well as impact on inflation.
“The Bill has a provision for further increase in VAT which will have an effect on cost of commodities, reduce purchasing power and further hike inflation. This will not be good for economy and Nigerians especially at a time government is planning to tame inflation,” he said
Speaking further, he raised concerns on implementation of the Law.
“The Law requires digital presence and capacity building which is currently lacking at the moment. Also, the Law requires collaboration with state governments to be implemented and if that synergy is not there, it will be difficult.
“Similarly, out of 774 local governments, over 250 do not have access to mobile networks, so these infrastructure issues and digital capacity must be addressed to ensure smooth implementation,” he said.
On the positive side, he said “The zero corporate tax for businesses that have turnover of less than N50m is a huge positive and encouragement for Nigerians that want to do business.”
Alaje said the government is on the right track as only 90 per cent of Nigerians pay very little tax, adding that the main people being targeted are the 10 per cent with huge business entities.
Former President of the Chartered Institute of Taxation of Nigeria (CITN), Adesina Adedayo, said it would be a disservice if there’s no political will to effectively implement the new tax laws.
Speaking Daily Trust, Adedayo admitted that lack of political will often impedes implementations of laws in Nigeria, but expressed optimism that the tax laws case would be different.
He described the presidential assent as a welcome development and urged stakeholders and tax experts to scrutinise content of the acts to ensure it aligns with the policy of the government.
Also speaking, first professor of capital markets, Prof. Uche Uwaleke noted that the signing will improve ease of doing business in the country.
“It’s a bold and commendable development capable of positively transforming the country’s tax landscape.
“The provisions contained in the Nigerian Tax Act not only eliminate multiple taxes that have proved to be a huge burden on businesses, but also serve as a powerful tool for promoting jobs, redistributing income and growing the economy.
“With low-income earners now exempted from tax, and the tax threshold for small businesses now increased from N25m to N50m, the new tax regime is more progressive and fairer, unlike what currently obtains where businesses that record losses are still expected to pay 0.5% of their turnover as tax.
“So, I see the new tax laws improving Nigeria’s ease of doing business paving way for more investments,” he explained.
Prof. Uwaleke added that the Nigeria Revenue Service (Establishment) Act promises to plug leakages inherent in the collection of taxes by multiple agencies.
He however noted that “What remains to be seen is how well all these will be implemented. In this regard, a phased implementation approach is recommended.”
An economic analyst, Samuel Caulcrick in his comment said the new tax laws would have impact on Nigeria’s economy and governance.
He said, “The signing of these bills into law, in my opinion, indeed marks a significant shift towards greater transparency and accountability in tax revenue management in Nigeria. It was Margret Thatcher who said, ‘When people pay nothing, they care nothing’. Now, taxpayers, with the majority paying taxes, will be emboldened to demand better public accountability, and the government will have to be more responsive to the needs and concerns of citizens.
“The new tax policy will also help reduce public borrowing, lower interest rates, and stabilise the naira, creating a more favourable business environment.
“By reducing government borrowing, the new tax policy should lead to lower interest rates and increased access to credit for private sector businesses.
“A more stable macroeconomic environment will foster economic growth, job creation, and improved living standards.
“I always thought it was one aspect, common in developed economies, that Africa did not get right – taxation. I suppose this analysis highlights the potential benefits of tax reform and increased accountability in promoting economic stability and good governance.” (Daily trust)
