July 7, 2025

In a major development affecting both individuals and businesses, Nigerian banks are now required to report customer accounts with monthly transactions exceeding ₦5 million to the Federal Inland Revenue Service (FIRS). This directive, recently announced by the National Orientation Agency (NOA), forms part of the 2025 Tax Reform Act aimed at enhancing tax compliance and promoting fiscal transparency. Key Highlights of the Reform Under Section 30 of the Act, commercial banks must submit monthly reports of high-value transactions to FIRS and other relevant tax authorities. The objective is to strengthen oversight, reduce tax evasion, and align Nigeria’s tax system with global best practices. The NOA emphasized via its official social media channel that this measure is a strategic move to ensure all taxable income is accurately reported and accounted for—particularly from the informal and high-net-worth segments of the economy. Expanded Tax Relief for Low-Income Earners In addition to enhanced reporting requirements, the reform introduces several taxpayer-friendly provisions: Revised VAT Sharing Formula Starting 2026 From 2026, a new Value-Added Tax (VAT) revenue distribution model will take effect: This new model is designed to reward states that generate higher consumption levels, such as Lagos and Rivers, encouraging state governments to drive local economic activity and boost internally generated revenue. Implications for Taxpayers and Financial Institutions The dual focus on improved revenue collection and equitable redistribution signals a significant shift in Nigeria’s tax policy. Analysts suggest that these reforms could expand the country’s tax base without overburdening low-income earners. However, concerns around data privacy have also been raised. Financial institutions and privacy advocates are urging the government to issue clear guidelines to ensure customer data is protected and that the new reporting system is not misused. Looking Ahead With implementation set to begin in 2026, businesses and individuals are encouraged to review their financial activities and ensure full compliance. Our firm is closely monitoring developments and is available to support clients in understanding how these changes may affect their tax obligations and financial strategies. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

In a landmark move to modernize Nigeria’s tax system, President Bola Ahmed Tinubu signed a suite of tax reform bills into law on June 26, signaling a new era of simpler, fairer, and more efficient taxation in the country. These reforms aim to eliminate outdated and overlapping tax regulations, enhance compliance, and ease the burden on individuals and businesses. The reform package includes four key legislations: 1. Nigeria Tax Act: One Simplified Tax Code This Act merges multiple old tax laws into one streamlined framework. In the past, taxpayers faced confusion due to inconsistent and overlapping tax rules. Now: 2. VAT: Protection for Essentials While the VAT rate remains at 7.5%, essential goods and services such as food, education, healthcare, housing rent, and public transport are either exempt or zero-rated.This is intended to reduce the tax burden on average Nigerians while supporting business growth by: 3. Nigeria Revenue Service (NRS): A Modern Tax Authority The Nigeria Revenue Service replaces the Federal Inland Revenue Service (FIRS). The NRS will now: 4. Joint Revenue Board: Unified Tax Administration A new Joint Revenue Board will coordinate efforts among federal, state, and local tax authorities, ensuring: Tax Reliefs for Individuals and Businesses Effective Date and Next Steps These reforms will take effect from January 1, 2026. This grace period allows the government to: A New Chapter for Taxation in Nigeria The passing of these reform bills marks a significant shift in Nigeria’s tax philosophy—one that values clarity, fairness, and efficiency. For taxpayers, it means knowing your rights, fulfilling your responsibilities, and having clear channels for support and redress.

The Senate Committee on the Review of the 1999 Constitution has affirmed that it has taken note of the key issues raised by Nigerians during its recent series of public hearings and is committed to addressing them in the ongoing amendment process. Speaking at the conclusion of the South-West Public Hearing in Ikeja, Lagos, Deputy Senate President and Committee Chairman, Senator Jubrin Barau, represented by Vice Chairman and Senate Leader, Senator Opeyemi Bamidele, stated that all submissions received would be carefully reviewed and presented to the full Senate for deliberation. According to Senator Barau, the committee is working toward submitting a final draft of the constitutional amendment to the State Houses of Assembly before the end of 2025, in line with the legislative timetable. Major Issues Raised During the Hearings Senator Barau highlighted that stakeholders from the South-West and other regions voiced strong opinions on several critical national matters, including: He emphasized that the hearings were far from ceremonial and that the committee is determined to give all issues the thoughtful consideration they deserve to advance democratic governance and national development. Inclusive and Transparent Process “The whole essence is to ensure that the constitution is not changed without the popular consensus of Nigerians,” Barau said, assuring citizens that meaningful outcomes would emerge from the process, just as in previous amendments. He added that the committee has heard from a diverse cross-section of the population, including youth groups, women, professionals, and traditional rulers, and that their concerns will guide the final proposals. Barau noted that reforms achieved in past constitutional reviews—particularly in Nigeria’s electoral framework—are evidence that such engagements can produce tangible improvements. Focus Areas of the Constitutional Review According to the News Agency of Nigeria (NAN), the committee is prioritizing the following thematic areas in the current amendment process: Barau concluded by reaffirming the Senate’s commitment to participatory democracy, stating that Nigerians will continue to have a voice in shaping the laws that govern them.