NEW TAX LAWS TAKING EFFECT IN NIGERIA IN JANUARY 2025
8 months ago
The proposals for the new tax law show exemptions for some entities and a higher threshold for others.
President Bola Tinubu
The Presidential Fiscal Policy and Tax Reforms Committee headed by Taiwo Oyedele has delivered results and made several recommendations and proposals to the 2024 tax bills. According to documents by the committee, some of the proposals have been implemented and not all the recommendations are at the same stage.
The 2024 proposals and recommendations for the Tax Reform Bill have been carefully curated by a team of Nigerians who developed their inputs using existing data and evidence. The committee promised that legal frameworks and administrative structures have been put in place to ensure the institutionalisation of the reforms.
The structures referenced would involve the use of technological systems to regulate and block loopholes to corruption. Also, self-service and the regulation of tax agents coupled with amnesty and whistleblowing frameworks will be used to purge the system.
The proposals by the committee touch on the Withholding Tax Laws (WHT) Regulations, VAT Administration, Executive Orders, and the 2024 National Fiscal Policy.
They are simple principles that target equal taxation across all taxable entities. More so, a framework for subsidy and cash transfers, which influence issues of borrowing and spending is included in the proposals. Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDGs) policies will cover companies’ economic activities and investments.
Tax Laws in Nigeria in 2025 – Overview
The federal government begins implementation of new tax laws by 1st January 2025 after 90 days of notice aligning with tax changes in the 2017 National Tax Policy. Here are some of the changes to expect.
Withholding Tax Laws WHT Bills — Small businesses are fully exempted from this bill from 2025.
VAT Bills — Small businesses are fully exempted from this bill from 2025. The new tax bill proposes a change in the sharing formula of the existing VAT from FG 15%, States 50% and LGs 35% to FG a10%, States 55% and LGs 35%. All consumption taxes other than VAT will be discontinued.
Workers — New minimum wage earners as well as those who earn slightly more will be fully exempted from tax. Individuals earning about N1.7m or less per month will pay lower PAYE taxes.
Corporate — Corporate income tax exemption will be at a higher threshold of N50m annual turnover.
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