Jun 27, 2025, 3:57 PM

What Changes in Nigeria as Tinubu Signs Tax Reform Bills — Expert Opinions

by:

Christina Ngene

A broader, more efficient, and fairer tax system designed to boost revenue without unduly burdening the most vulnerable Nigerians

Tinubu Signs Tax Reform Bills

A bad economy, continuous insecurity – food and safety, widespread hardship, rising unemployment and anger is what currently defines Nigeria. With the new tax reform bill signed, what changes in the country? Do the bills make provision for small businesses to thrive, and maybe a hope for young people?

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Nigeria Tax Reform Bills. Photo: Pixabay/Peggy_Marco

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Does it make room for sustainability for the poor – housing, security and food? What will the tax reform bills do for Nigeria?

Take a look at the reform for a quick overview — worth mentioning is the remodelling of the Nigeria Tax Bill and the VAT.

President Bola Tinubu has now signed the four major finance bills into law, launching a comprehensive reform of Nigeria’s tax system. The changes aim to simplify tax collection, reduce the burden on low-income earners and small businesses, and boost government revenue through more efficient processes.

Overview of Changes as Tinubu Signs the Tax Reform Bills

The signing of four major tax reform bills marks a sweeping overhaul of Nigeria’s tax system, with far-reaching implications for individuals, businesses, and the broader economy.

1. Consolidation and Simplification of Tax Laws

The Nigeria Tax Act merges most existing federal tax laws—including income tax, VAT, and capital gains tax—into a single, modernized code, replacing over 50 minor, outdated taxes. This aims to reduce complexity, eliminate redundancies, and make compliance easier for both individuals and businesses.

2. Unified and Modernized Tax Administration

The Nigeria Tax Administration Act establishes uniform tax collection rules across federal, state, and local governments, replacing fragmented systems with a single, streamlined framework.

The Nigeria Revenue Service Act replaces the old Inland Revenue Service with a new, independent Nigeria Revenue Service, enhancing efficiency and accountability.

The Joint Revenue Board Act improves coordination between government tiers and introduces a Tax Ombudsman and Tax Appeal system to resolve disputes.

3. Digitalization and Compliance Upgrades

Mandatory tax identification registration for all taxpayers.

Introduction of electronic fiscal systems (EFS) for digital tax filing and monthly return requirements (including VAT), aiming to reduce evasion and improve revenue collection.

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Penalties for non-compliance and mandatory disclosure of tax planning strategies.

Impact on Individuals and Households

1. Protection and Relief for Low-Income Earners

Individuals earning up to ₦800,000 (about $520) per year will be exempt from personal income tax, significantly increasing disposable income for low-wage workers and their families.

Rent concessions and tax-free severance pay (up to ₦50 million) provide additional relief for vulnerable groups.

2. VAT Exemptions on Essentials

Essential goods and services—including food, healthcare, education, housing, electricity, baby items, public transport, and renewable energy—are exempt from Value Added Tax (VAT), directly reducing living costs for most Nigerians.

This measure is expected to ease inflationary pressures on basic necessities, benefiting low- and middle-income households.

3. Progressive Taxation

The reforms introduce higher thresholds and progressive tax rates, shifting more of the tax burden to wealthier individuals while easing it for the majority.

Over 90% of workers are expected to see a reduced tax burden or outright exemption, improving purchasing power and welfare.

Impact on Businesses and the Economy

1. Support for Small Businesses

Small enterprises with annual revenues below ₦50 million (about $32,400) are exempt from corporate income tax and can file simpler returns without mandatory audited statements.

Locally made goods benefit from tax reliefs, encouraging domestic production, job creation, and reduced import dependency.

2. Changes for Larger Corporations

Corporate tax rates for large companies will decrease from 30% to 25% over time, with additional tax credits for VAT paid on inputs and assets.

Companies with turnover above ₦20 billion must ensure proper tax compliance, with stricter enforcement and higher rates for underpayment.

3. Boost to Investment and Competitiveness

The reforms are expected to improve Nigeria’s business environment, attract both domestic and foreign investment, and enhance competitiveness by unifying tax laws and reducing compliance burdens.

The Lagos Chamber of Commerce and Industry projects a significant increase in non-oil tax revenues and improved investor confidence.

Potential Economic Effects

Area	Expected Change
Inflation	Short-term inflationary pressure possible as businesses adjust, but VAT exemptions on essentials will help offset this for most households.
Tax Compliance	Higher compliance due to digitalization, unified administration, and stricter penalties.
Government Revenue	Broader tax base and improved collection efficiency expected to boost non-oil revenue.
Social Equity	Lower tax burden for low-income earners and essentials, more progressive system overall.

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What Changes in Nigeria as Tinubu Signs Tax Reform Bills — Expert Opinions

Christina Ngene

Culturays