President Bola Tinubu has reaffirmed his commitment to comprehensive tax reforms, acknowledging the challenges of transforming the country’s tax system but describing it as vital for Nigeria’s long-term growth.
“It was not easy at first, but nation-building is never straightforward. You have demonstrated true leadership and courage in the face of rising disputes. Tax reforms are never simple anywhere in the world,” President Tinubu said.
Speaking to journalists at the State House shortly after the president signed four significant fiscal reform bills into law, the Chairman of the newly renamed Nigeria Revenue Service (NRS), Zach Adedeji, announced that the implementation would officially begin on January 1, 2026.
He explained that the six-month gap before rollout is to give adequate time for planning, capacity building, and widespread public awareness.
“With these new laws, the Federal Inland Revenue Service (FIRS) has officially become the Nigeria Revenue Service (NRS),” Adedeji said. “The new Act broadens our mandate beyond taxes to include non-tax revenue collection, while raising the bar for transparency, accountability, and efficiency.”
According to Adedeji, the Nigeria Revenue Service (Establishment) Act replaces the old FIRS Act and creates a more independent, results-driven national revenue agency.
“Just two hours ago, we were FIRS. Now, we are the Nigeria Revenue Service — with a wider reach and a stronger focus on efficient revenue collection,” he added.
The Chairman of the Presidential Committee on Tax Reforms, Taiwo Oyedele, also emphasised that President Tinubu has directed that the new tax measures must be implemented inclusively and collaboratively.
“We are ready, but this is not something government can achieve alone. It demands collective effort,” Oyedele said. He added that the committee will work closely with the private sector, professional bodies, civil society organisations, and international partners.
“Everyone who means well for Nigeria — tax professionals, civil society, private businesses, and global partners — will have a role to play,” he said.
Speaking during an interview on Channels Television, Oyedele noted that households earning ₦250,000 or less per month would no longer pay personal income tax under the new regime.
He explained that the goal is to boost economic growth, reduce pressure on low-income earners, and make the wealthy contribute more.
“This new tax law may not put money directly in your pocket, but if you’re poor, it won’t take away the little you have,” Oyedele said, adding that Nigerians earning below ₦250,000 monthly will be exempt because they barely earn enough to cover basic needs.
Key Features of the New Tax Laws
Before the bills were signed, there were concerns about a possible increase in the tax burden on citizens. However, the new laws keep the Value Added Tax (VAT) at 7.5% and maintain the corporate income tax at 30%. They also introduce VAT exemptions for essential goods and services such as staple food items, medical care, pharmaceuticals, tuition fees, and electricity — all designed to shield the poor from additional costs.
A major change is the transition of the FIRS to the NRS, which will also handle revenue collection for other federal agencies, including the Nigeria Customs Service, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the Nigeria Ports Authority (NPA).
The reforms specify that only individuals earning over ₦50 million annually will pay the highest personal income tax rate of 25%, while small businesses are exempt from income tax altogether. For medium and large companies, the corporate tax rate will drop from 30% to 25% starting in 2026.
Mixed Reactions from Analysts and Stakeholders
Experts have urged the government to demonstrate strong political will to ensure that the reforms are fully and effectively enforced.
Paul Alaje, Senior Partner at SPM Professionals, warned that any future VAT increase could raise the cost of living and worsen inflation.
“The bill includes a clause that could allow VAT to be increased later, which would push up the cost of goods and reduce purchasing power — not ideal when inflation is already high,” he said.
Alaje also raised concerns about practical challenges.
“The law requires digital readiness and close collaboration with state governments, but over 250 out of 774 local governments in Nigeria still lack reliable mobile networks. Infrastructure and capacity gaps must be closed to make implementation work,” he said.
On a positive note, he praised the exemption of small businesses with a turnover below ₦50 million from corporate tax, calling it a major boost for entrepreneurs.
“About 90% of Nigerians pay little or no tax. It’s right that the government focuses on big businesses and wealthy individuals while supporting small businesses to grow,” he added.
Adesina Adedayo, former President of the Chartered Institute of Taxation of Nigeria (CITN), welcomed the reforms but stressed that without political will, good policies often fail.
“It would be a setback if this ends up like other well-intended laws that were poorly implemented. Stakeholders must study the Acts to ensure they align with national goals,” he said.
Professor Uche Uwaleke, Nigeria’s first professor of capital markets, described the reforms as a bold step towards improving the business climate.
“These new measures remove multiple taxes that have long burdened businesses, promote job creation, and help redistribute income. With low-income earners exempted and the tax threshold for small businesses raised, the system is now fairer and more progressive,” he explained.
He noted that consolidating tax collection under the NRS could help reduce leakages but stressed that phased and careful implementation would be critical to success.
Economic analyst Samuel Caulcrick argued that the new tax laws would improve accountability, reduce the need for borrowing, lower interest rates, and help stabilise the naira.
“When more people pay taxes, they hold leaders accountable. This shift can enhance transparency and reduce excessive government borrowing, which should lower interest rates and make credit more accessible to businesses,” he said.
Caulcrick added that sound tax systems are crucial for economic stability and good governance, describing the reforms as a positive step towards strengthening Nigeria’s fiscal framework.
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.
