Yemisi

The International Monetary Fund (IMF) has endorsed Nigeria’s choice to postpone raising the Value Added Tax (VAT) rate, citing the country’s ongoing struggles with high poverty and food insecurity. In its recent Article IV consultation report, the IMF stated that deferring the VAT hike is a reasonable approach, especially since the national cash transfer system designed to assist the most vulnerable households is not yet fully implemented. This recommendation comes as Nigerian households face rising living costs coupled with stagnant income growth—factors that could be exacerbated by new tax burdens. The IMF’s guidance aligns with Nigeria’s broader fiscal reform agenda, which aims to modernize tax collection systems and improve public finance efficiency. Despite recent progress, the Fund noted that Nigeria still maintains one of the lowest revenue-to-GDP ratios globally. New tax reform bills, developed by the Presidential Committee on Fiscal Policy and Tax Reforms and recently enacted into law, are expected to overhaul the VAT and Corporate Income Tax (CIT) systems to boost compliance and enforcement. Nigerian authorities see significant medium-term benefits from these reforms, with the IMF providing ongoing capacity development support, including the placement of a resident advisor. However, the IMF cautioned that delaying the VAT increase will result in a short-term reduction in consolidated government revenue by up to 0.5% of GDP. The federal government may offset some losses through higher corporate tax collections, but state and local governments will likely feel the impact most acutely. Without alternative revenue sources, subnational governments may need to increase their own tax collections or reduce spending, the report warns. Rather than rushing to increase VAT rates, the IMF recommends that Nigeria focus on building long-term fiscal credibility and sustainability. The Fund suggests authorities commit to a clear timeline for implementing future tax policy measures within an updated medium-term fiscal framework. Such a strategy, the IMF argues, will strengthen investor confidence, clarify available resources, and safeguard development and social protection programs for vulnerable populations. The IMF’s technical assistance continues to play a crucial role in helping Nigeria balance the urgent need for increased revenue with the imperative to protect its poorest citizens. 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.

The Federal Inland Revenue Service (FIRS) is giving Micro, Small, and Medium Enterprises (MSMEs) across Nigeria more reasons to stay compliant. Through a newly launched incentive scheme, FIRS is offering cars, cash prizes, and other valuable rewards to businesses that consistently file their tax returns and pay taxes on time. Promoting a Stronger Tax Culture This initiative is part of a broader effort by FIRS to build a robust and sustainable tax culture in Nigeria. Despite ongoing reforms, many entrepreneurs still operate outside the formal tax net. FIRS aims to change this narrative by providing tangible incentives for voluntary compliance. Speaking at the launch of the program, FIRS Chairman Zacch Adedeji noted that the rewards go beyond mere recognition—they are designed to promote transparency, responsibility, and fairness in business practices. “The goal is not just about giving out prizes. It’s about reinforcing the value of doing business the right way and contributing to national development,” Adedeji said. Rebuilding Trust with MSMEs For many small business owners, taxation is often viewed as a burden, exacerbated by limited access to information and perceived inefficiencies. The new reward program aims to shift that perception by showing that compliance can lead to direct benefits. Adedeji emphasized that the agency is working to simplify tax processes and foster a cooperative relationship with entrepreneurs. He encouraged business owners to see tax payment as a shared civic duty—one that benefits both the government and the private sector. Timely Compliance Comes with Rewards The program is specifically targeted at MSMEs that file accurate tax returns and pay their taxes on time. Eligible businesses stand a chance to win automobiles, cash awards, and business support packages. FIRS believes that such real-world incentives can draw more businesses into the formal economy, increasing national revenue and providing MSMEs with greater opportunities for growth and visibility. Strengthening the Relationship Between Government and Business This initiative reflects a broader strategic shift toward incentive-driven compliance rather than enforcement alone. It also demonstrates a commitment to making taxation more inclusive and business-friendly. For MSMEs, this is not just about prizes—it’s an opportunity to formalize operations, access government support, and be acknowledged as key contributors to Nigeria’s economic development. 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.

The Nigerian Tax Act 2025, signed into law last Thursday after months of deliberation, marks a watershed moment in Nigeria’s journey toward a more efficient, inclusive, and growth-oriented tax system. By consolidating four critical tax reform bills—the Nigerian Tax Act, Nigerian Tax Administration Act, Nigerian Revenue Service Act, and Joint Revenue Board Act—into a single, comprehensive legal framework, the government aims to simplify administration and enhance clarity for taxpayers and institutions alike. This development represents a major shift for Africa’s largest oil producer, whose overreliance on an outdated colonial-era tax structure has hindered competitiveness, fostered inefficiency, and contributed to persistent fiscal opacity. Despite having one of the lowest tax-to-GDP ratios globally, Nigeria is finally taking steps to reverse this trend. Context and Challenges Previously, Nigeria imposed over 60 different taxes and levies, many of which contributed little to public revenue but created significant obstacles for businesses and investors due to multiple taxation and a convoluted collection process. Although the country’s tax-to-GDP ratio has improved—rising from 10.8% to 13.5%—it still lags behind the African average of 16% and South Africa’s 24.5%. The new reforms aim to close this gap with a more equitable, digitised, and streamlined system. “If everything works out, Nigeria should be at a minimum of 18 to 20 per cent of GDP, translating to around N50 trillion in today’s value,”— Taiwo Oyedele, Chair, Presidential Fiscal Policy and Tax Reforms Committee (Channels TV) Yet, Nigeria’s tax gap—estimated at 70%—underscores the scale of the challenge. The FIRS has set a 2025 collection target of 57%, making enforcement and compliance a top priority. Key Institutional Changes One of the landmark features of the new framework is the establishment of the Nigerian Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS). Unlike its predecessor, the NRS has a broader mandate, encompassing not just tax collection, but also assessment and revenue accountability across the federation. According to Oyedele, the reform’s primary objective is not merely to raise more revenue, but to build a people-centric, growth-driven, and efficient tax system. “If you don’t address how to stimulate economic activities but want to collect more taxes, you’re chasing shadows.” Highlights of the Nigerian Tax Act 2025 ✅ Tax Exemptions ✅ Essential Goods VAT Exemption The 7.5% VAT rate is maintained, but essential goods and services—food, education, healthcare, housing, electricity, and transportation—are now exempt from VAT. Businesses can also recover VAT on inputs used before the new law’s implementation. 🔺 Tax Increases 💰 VAT Revenue Allocation State and local government allocations will be based on: Looking Ahead: Implementation in 2026 Implementation of the Nigerian Tax Act 2025 will begin in January 2026, with a strong emphasis on digitalisation, data integration, and compliance monitoring. Authorities also plan to shift greater tax responsibility toward high-net-worth individuals and large corporations, while protecting vulnerable populations and SMEs. Conclusion The Nigerian Tax Act 2025 is more than a fiscal document—it’s a blueprint for rebuilding trust in the social contract between the state and its citizens. If effectively implemented, it could catalyse inclusive economic growth, improve public services, and position Nigeria for long-term fiscal sustainability. But as always, execution is everything. The true test lies in translating this reform from legislation into real-world benefits—especially for the working class, small businesses, and underserved communities. 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.

Nigeria’s latest round of tax reforms—introduced through legislative amendments and fiscal policy announcements—has been branded by the government as transformational. With a vision to broaden the tax base, boost revenue, and reduce dependence on oil, the reforms promise a more equitable system. But the big question remains: Will they actually benefit millions of hardworking Nigerians—those earning through honest labour, entrepreneurship, and micro-enterprise? The Uneven Tax Burden Nigeria’s tax system leans heavily on indirect taxes—like VAT and levies—that disproportionately affect low-income earners. Formal sector workers already contribute through PAYE, while wealthier individuals and corporations often benefit from exemptions, loopholes, or preferential treatment. A 2023 report by the Federal Inland Revenue Service (FIRS) revealed that a staggering 70% of potential tax revenue remains uncollected. In response, the Presidential Fiscal Policy and Tax Reforms Committee, led by Taiwo Oyedele, has proposed sweeping reforms focused on fairness, compliance, and administrative efficiency. These include: These proposals are promising—especially for those on the margins—but their success hinges on execution, equity, and whether revenues will tangibly improve public services. For the Working Class, Skepticism Is Justified From market women and artisans to gig workers and junior civil servants, Nigeria’s working class pays taxes in myriad ways—often without formal recognition. Indirect taxes on essential goods, tolls, levies, and informal payments at local markets or checkpoints hit them hardest. Yet, many of these citizens receive little in return: failing schools, erratic power, poor healthcare, and crumbling infrastructure. While government officials claim these reforms will lighten their load, the goal of raising Nigeria’s tax-to-GDP ratio from 10.8% to 18% suggests otherwise. Without progressive taxation or reinvestment in social services, working-class Nigerians fear more take and little give. Promises vs. Practical Realities Proposed reforms like raising the VAT threshold and simplifying the tax system are necessary steps. Yet gaps persist. There is little in the reform documents about: The last major reform, the 2019 VAT hike from 5% to 7.5%, raised revenues but failed to significantly improve citizens’ lives—leaving many disillusioned. Additionally, aggressive and uncoordinated revenue collection at the state and local levels remains a serious issue. Market vendors, truck drivers, and barbers are routinely subjected to overlapping fees and unofficial levies—often with no receipt or accountability. A truly effective reform must include subnational harmonisation, capacity building, and oversight. Inclusion: Not Just a Buzzword Nigeria’s informal economy is heavily populated by women, who are overrepresented in low-margin, VAT-burdened businesses. Yet, they are rarely consulted in tax policy discussions. Persons with disabilities also face systemic barriers—from discrimination to poor infrastructure access. Although the committee has pledged a gender- and disability-inclusive approach, this must go beyond lip service. Inclusion must be enshrined in legislation, institutional processes, and implementation frameworks. Technology and Trust: A Double-Edged Sword? Digitisation is a key pillar of the reforms. Platforms like FIRS’s TaxPro Max promise transparency, efficiency, and fewer intermediaries. However, millions of Nigerians still lack internet access or digital literacy. Without bridging this digital divide, automation may simply exclude the very people it intends to help. There’s also the risk of digital surveillance. Citizens need guarantees that their data will be protected and used solely for legitimate tax and service delivery purposes—not political or commercial exploitation. The Political Elephant in the Room Ultimately, Nigeria’s biggest tax problem is not just technical—it’s political. The entrenched interests of elites who benefit from opaque tax exemptions, asset secrecy, and weak enforcement are a major barrier. Reforms must address: Reform without political will is rhetoric. True change requires transparency, accountability, and civic pressure. What a Working-Class-Centred Tax Reform Should Look Like A truly inclusive tax policy would: Taxation as a Social Contract Tax is more than a revenue tool—it is a moral contract between citizens and the state. Nigeria’s tax reform moment is an opportunity to rebuild that contract, with justice and equity at its core. Until the average artisan sees better roads, the teacher earns a livable wage, the market woman sends her daughter to school, and families access affordable healthcare, we must keep asking: Whose reform is it anyway? 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.

The Lagos State Government has introduced the Lagos Identity Project, a digital house-numbering system designed to improve property identification and service delivery throughout the state. Dr. Olajide Babajide, the Special Adviser to the Governor on Enterprise Geographic Information System, stated that this initiative will greatly enhance the accuracy of property identification and the efficiency of public services. He shared these insights on Tuesday during the project’s launch event held in Alausa, Lagos. Babajide highlighted that the digital plates, which feature QR codes and local government-specific color codes, will strengthen emergency response capabilities, postal services, and urban planning efforts. “This initiative is focused on delivering world-class services to Lagosians—services they rightfully deserve. “We have faced challenges such as tax evasion and untraceable addresses. This new digital system addresses those issues,” he explained. He added that scanning a building’s QR code will provide residents and relevant parties with immediate access to key property details. The Special Adviser emphasized that the project will help prevent rental fraud and improve emergency location tracking across Lagos communities. He also connected this smart city initiative to previous achievements in Lagos, including the establishment of a data center during President Tinubu’s tenure as governor. According to Babajide, these technological advancements have earned Lagos global recognition in digital governance from organizations like the World Bank. He noted that Ikeja, with 23,000 properties, will be the first local council to undergo digital numbering starting in July, with plans to extend the program to other local councils in the state over time. “We encourage all owners of subdivided properties to come forward for reidentification,” he concluded. 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.

The Corporate Affairs Commission (CAC) has unveiled a pilot Artificial Intelligence-driven registration portal designed to transform the current Company Registration process. Hussaini Ishaq Magaji, the Registrar-General and CEO of CAC, announced the launch during the 2025 Stakeholders’ Forum meeting. The commission described this innovative platform as a major breakthrough aimed at drastically reducing registration timelines and improving ease of doing business nationwide. The new system offers instant name reservation approvals, similar to setting up an email account. Magaji explained, “The portal intelligently suggests available name alternatives and provides real-time approvals, eliminating traditional bottlenecks.” One of the portal’s key features is its ability to register businesses using just the National Identification Number (NIN) of a director or proprietor. Upon successful real-time NIN verification, a certificate of incorporation is generated and emailed to applicants within 30 minutes. Magaji emphasized, “Our goal is to complete business registration and certificate delivery in under 30 minutes, contingent on real-time NIN validation.” While some delays may occur due to external verifications from the National Identity Management Commission, the platform incorporates an AI-powered photo ID matching system to address such challenges. Additionally, CAC plans to introduce two-factor authentication with OTP verification for all transactions, ensuring company records cannot be altered without the explicit consent of registered directors. Looking ahead, a CAC mobile app will be launched in Q4 2025 to enable users to monitor and manage their transactions conveniently from their devices. Magaji also revealed ongoing discussions with over 100 local and international partners, including the Nigerian Inter-Bank Settlement System, to expand access and streamline services further. In line with these enhancements, CAC will review its service fees starting August 1, 2025, to support quality service delivery and ongoing reforms. The forum featured goodwill messages from prominent industry leaders including the Nigerian Bar Association’s Port Harcourt Chairman, Cordelia U. Eke; the Institute of Chartered Secretaries and Administrators’ Chairman, Sir Sebastian Essien; and Elder Dogala Sakpege of the Nigerian Association of Small and Medium Enterprises. Representatives from the Rivers State Ministry of Commerce and Industry and the Institute of Chartered Accountants of Nigeria, Port Harcourt branch, also attended. A dedicated CAC technical team was present throughout the event to address customer concerns and provide immediate solutions to registration issues. 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 recent years, the landscape of business taxation has become increasingly complex and unpredictable. That volatility has only intensified in 2025, as Congress considers sweeping tax reforms, global trade dynamics continue to evolve, and federal government restructuring efforts unfold. In this uncertain climate, many business leaders may feel inclined to delay decision-making until clarity emerges. However, inaction can be costly. Proactive and systematic tax planning remains one of the most effective tools for businesses seeking stability and resilience amid change. 1. We’re in an Era of Constant Legislative Flux Recent election cycles have consistently produced narrow majorities and short windows of unified government—conditions that often result in significant, though temporary, policy shifts. A prime example is the Tax Cuts and Jobs Act (TCJA) of 2017, which introduced wide-reaching tax cuts but included numerous sunset provisions, many of which are scheduled to expire at the end of 2025. Provisions like: Additionally, tax policy is frequently used as a tool to respond to economic disruption. For instance, during the COVID-19 pandemic, Congress passed the CARES Act, leveraging the Tax Code to provide relief via: This demonstrates that during periods of economic turbulence, the Tax Code is often the first place Congress turns to deliver business support. 2. Practical Strategies for Tax Planning in a Shifting Environment Given the unpredictable nature of tax policy, businesses should: 3. Fiscal Policy Pressures Will Shape Future Tax Increases Rising national debt and growing budget deficits are putting tax policy under increased scrutiny. Legislators are now weighing tax changes not only for their policy implications but also for their fiscal impact. Historically, these concerns have prompted: Even recent political figures who once championed tax reductions, including President Trump, have hinted at rate increases to balance the fiscal equation. What This Means for Your Business 4. The Power of Process: Planning Reduces Uncertainty Uncertainty in tax policy doesn’t have to paralyze decision-making. Businesses that implement a consistent tax planning process, evaluate the implications of change, and remain agile in their financial strategies will be best positioned for success. 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.

President Bola Tinubu is set to sign four pivotal tax reform bills into law on Thursday, a development poised to significantly reshape Nigeria’s tax and revenue framework. This was confirmed in a statement released on Wednesday by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, titled “President Tinubu signs four tax bills into law tomorrow.” The legislation includes: These bills, passed by the National Assembly following extensive consultations with stakeholders, aim to modernize and streamline Nigeria’s tax system, enhance compliance, and drive revenue growth. According to Onanuga, the new tax laws are expected to improve the business environment, attract both local and foreign investment, and optimize tax administration across all tiers of government. The signing ceremony at the Presidential Villa in Abuja will be attended by key government officials, including Senate President Godswill Akpabio, House Speaker Tajudeen Abbas, Senate Leader Opeyemi Bamidele, House Majority Leader Julius Ihonvbere, Chairmen of the Senate and House Finance Committees Sani Musa and James Faleke respectively, as well as Governors Abdulrahman Abdulrazaq and Hope Uzodinma. Also present will be Finance Minister and Coordinating Minister of the Economy, Wale Edun, and the Attorney General of the Federation, Lateef Fagbemi. Overview of the Four Tax Reform Bills: These reforms mark a significant step toward a more efficient, equitable, and investment-friendly tax system in Nigeria. 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.

The Managing Director of UpdateAfrika Communications, Dr. Joseph Effiong, has credited Lagos State’s unprecedented revenue milestone—surpassing N1 trillion—to ongoing tax reforms and the successful implementation of a digitized tax system. Dr. Effiong commended the Lagos State Internal Revenue Service (LIRS), led by Executive Chairman Mr. Ayo Subair, for its strategic approach and innovative use of technology that has significantly transformed tax administration in the state. A standout feature of the LIRS’s reform efforts is its web-based platform, which enables taxpayers to conveniently handle essential tasks such as tax payments, return filings, and document retrieval—including the issuance of electronic Tax Clearance Certificates (TCCs). The digital upgrade, aimed at enhancing operational efficiency and reducing physical visits to tax offices, has been lauded by stakeholders for streamlining compliance processes. Dr. Effiong noted that the introduction of electronic TCCs for Personal Income Tax has simplified the process dramatically, with individuals now able to obtain their certificates within 24 hours. He emphasized that this advancement not only promotes voluntary compliance but also supports economic activity by removing bureaucratic hurdles. “The state’s revenue profile and testimonials from taxpayers highlight the effectiveness of this initiative,” Effiong stated. “By leveraging technology, the LIRS has set a benchmark for efficient tax administration that is already yielding economic benefits.” He also urged other states across Nigeria to adopt similar tech-driven tax strategies, emphasizing that doing so could enhance public trust, improve taxpayer compliance, and contribute to broader national revenue growth. Lagos State’s achievement serves as a strong example of how deliberate reforms, backed by digital innovation, can drive substantial progress in public sector revenue generation. 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.

ax fraud is a serious offense that occurs when individuals or entities intentionally falsify information to reduce their tax liability or obtain undue refunds. It ranges from submitting fake documents and underreporting income to participating in elaborate schemes that exploit loopholes or abuse the tax system. What Is Tax Fraud? Unlike honest mistakes or calculation errors, tax fraud involves a deliberate attempt to deceive tax authorities. As Larry Gray, government liaison for the National Association of Tax Professionals, explains: “You’ve got to look at the facts and circumstances. You’ve got to look at the taxpayer’s intent—or the advisor’s intent.” In other words, intent is key. Honest errors are not fraud, but willful deception is. Examples of tax fraud include: These practices can trigger IRS investigations and severe penalties. High-Profile Tax Fraud Cases Even celebrities have faced the consequences. Actor Wesley Snipes was sentenced to three years in prison for failing to file tax returns and pay millions in back taxes. Country music legend Willie Nelson owed over $16 million in taxes and penalties, resulting in the IRS seizing many of his assets. These cases underscore how seriously the IRS treats fraudulent tax activity. Penalties for Tax Fraud The IRS distinguishes between civil and criminal tax fraud: If the IRS suspects intentional wrongdoing, it may launch a full investigation to gather evidence. However, it typically prioritizes recovering owed taxes and may allow payment plans, offers in compromise, or other arrangements to settle debt—reserving criminal charges for the most egregious or abusive cases. “The IRS tends to try to avoid going into the criminal side of things. They just want their money,” says tax analyst Mark Luscombe. “But if they’ve got a really abusive situation, sometimes they want to make an example of someone.” Tax Fraud vs. Tax Avoidance It’s important to distinguish tax fraud from tax avoidance: Tax avoidance is simply smart financial planning—so long as it stays within the bounds of the law. But when avoidance strategies push too far, they risk becoming tax evasion, especially if based on aggressive interpretations of tax code or misleading disclosures. “If a tax avoidance strategy seems too good to be true, it probably is,” warns Luscombe. Protect Yourself: Consult a Tax Professional If you’re ever uncertain about a tax strategy or suspect something might cross the line, it’s essential to consult a qualified tax advisor. Reputable professionals can help you navigate the complexity of the tax code while staying compliant and optimizing your financial position. 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.