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 These reforms aim to eliminate outdated and overlapping tax regulations, enhance compliance, and ease the burden on individuals and businesses.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:
Nigeria Tax Act
Nigeria Tax Administration Act
Nigeria Revenue Service (Establishment) Act
Joint Revenue Board (Establishment) Act
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:
Duplicate taxation is eliminated.
All tax payments follow a uniform national standard.
Tax officers across states and regions must apply the same rules, ensuring consistency nationwide.
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:
Strengthening the input VAT credit system, which allows businesses to reclaim VAT paid on purchases.
Preventing double taxation.
3. Nigeria Revenue Service (NRS): A Modern Tax Authority
The Nigeria Revenue Service replaces the Federal Inland Revenue Service (FIRS). The NRS will now:
Collect all federal taxes, as well as fees and levies.
Use modern technology platforms for taxpayer registration, filing, and payment.
Improve speed, accuracy, and transparency in tax collection.
A new Joint Revenue Board will coordinate efforts among federal, state, and local tax authorities, ensuring:
Consistent tax policy across all levels of government.
Avoidance of conflicting tax demands.
Fairness through the creation of a Tax Appeal Tribunal and Office of the Tax Ombuds, giving taxpayers channels to resolve disputes and file complaints.
Tax Reliefs for Individuals and Businesses
Personal Income Tax Exemption: Individuals earning up to ₦800,000 annually will no longer pay personal income tax.
SME Relief: Small and medium enterprises (SMEs) with lower turnover will benefit from simplified tax compliance and reduced tax obligations.
Effective Date and Next Steps
These reforms will take effect from January 1, 2026. This grace period allows the government to:
Launch nationwide awareness campaigns.
Train tax officers.
Upgrade systems for a smooth transition to the new tax regime.
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 Renewed Hope administration is building a tax system that works for everyone—individuals, businesses, and the economy.”
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.
