July 28, 2025

The Federal Government has introduced sweeping changes to Nigeria’s tax framework under the newly enacted Nigerian Tax Act (NTA), set to take effect in January 2026. Among the most impactful reforms is the expansion of the Value Added Tax (VAT) exemption list — a move aimed at reducing the cost of essential goods and supporting vulnerable populations. Key Highlights: Under the new law, 24 items are now entirely exempt from VAT, including: This development marks a significant policy shift aimed at easing the tax burden on essential goods and services while improving the purchasing power of everyday Nigerians. “The exemption of products like sanitary pads and diesel reflects a more socially responsive tax system that considers both health equity and rising energy costs,”. Why This Matters for Nigerians The VAT exemption means consumers and businesses will no longer pay the standard 7.5% tax on these essential items, which should lead to lower retail prices, especially on high-demand goods such as diesel and agricultural inputs. This is also expected to benefit: Implications for Businesses Companies dealing in exempt goods and services should immediately: At Sunmola David, we provide tailored VAT compliance support to help your business adjust efficiently to these reforms. 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.

Under sweeping reforms introduced in the Nigerian Tax Act (NTA), which takes effect in January 2026, the Federal Government has decided to retain the corporate income tax (CIT) rate at 30 percent for all companies, except small businesses. The Act maintains a 0 percent CIT rate for small companies—defined as those with annual turnover below ₦25 million—while affirming a flat 30 percent rate for all other firms. According to the Act:“Tax shall be levied… at 0% for small companies and 30% for any other company from the commencement of this Act.” A key innovation in the new law is the introduction of a minimum effective tax rule: large companies—especially members of multinational enterprise (MNE) groups—with annual revenue of ₦20 billion or more and an effective tax rate below 15 percent in any given year will be required to pay an additional levy to meet that threshold. The Act also eliminates the existing 10 percent Capital Gains Tax (CGT), integrating it into the broader corporate tax structure and repealing the Capital Gains Tax Act entirely. Scrapped Plans to Lower CIT This decision follows prolonged discussions around tax competitiveness. In mid-2024, Taiwo Oyedele, chair of the Presidential Fiscal Policy and Tax Reforms Committee, proposed lowering the CIT to 25 percent to attract investment and stimulate economic activity. Similarly, a 2023 legislative bill aimed to reduce the rate to 27.5 percent in 2025 and 25 percent by 2026. However, both proposals have now been abandoned. With these reforms, the government is signaling its intent to strengthen revenue collection while preserving targeted incentives for small businesses—striking a balance between fiscal responsibility and long-term economic growth as Nigeria works toward its $1 trillion economy goal. 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.