As Nigeria prepares for landmark tax changes, government promises fairness, growth, and relief for households and enterprises
Nigeria is on the cusp of a major fiscal transformation as the Federal Government rolls out sweeping tax reforms aimed at correcting long-standing inequities, simplifying compliance, and repositioning the economy for sustainable growth.
The reforms, spearheaded by the Presidential Fiscal Policy and Tax Reforms Committee, are expected to significantly ease the tax burden on low-income earners and small businesses, while creating a more transparent and efficient revenue system.
Speaking at a one-day tax reform workshop organised by the Federal Inland Revenue Service (FIRS) in Lagos, Chairman of the Committee, Taiwo Oyedele, described the reforms as a historic turning point in how Nigeria raises, manages, and distributes public revenue.
According to Oyedele, the changes represent a fundamental reset of a tax system that has, for decades, been criticised for its complexity, opacity, and unfair treatment of ordinary Nigerians and businesses.
“This is about rebuilding trust between the government, citizens, and businesses,” he said. “The reforms are designed to be people-first, business-friendly, and growth-oriented.”
Correcting Past Inequities
Oyedele noted that previous tax policies often failed to protect vulnerable Nigerians. In some cases, low-income earners were either improperly taxed or excluded from clear exemptions, creating room for abuse and inconsistency in enforcement.
Under the new framework, minimum wage earners are fully exempt from personal income tax, while a new zero-percent income tax band ensures that low-income workers are protected. He also revealed that tax refunds for qualifying small businesses will commence from January 2026, further easing financial pressure on enterprises.
Three Pillars of the Reform
The new tax regime, Oyedele explained, is anchored on three core pillars:
- Fairness and equity
- Growth and competitiveness
- Simplification and efficiency
These principles are designed to align Nigeria’s tax system with global best practices while reflecting the country’s economic realities.
Corporate Tax Relief and Investment Drive
One of the most significant changes is the reduction of the Corporate Income Tax (CIT) rate from 30 percent to 25 percent. Although this is projected to cost the Federal Government about ₦1.4 trillion in revenue in 2026, Oyedele said the long-term benefits investment attraction, job creation, and economic expansion far outweigh the short-term revenue loss.
Relief for Households
To reduce the cost of living, Value Added Tax (VAT) has been removed from essential goods and services, including staple foods, education, healthcare, shared transportation, and rent. This measure is expected to directly improve household welfare and increase disposable income for millions of Nigerians.
Major Boost for Businesses
Businesses are also set to benefit from far-reaching reforms. Input VAT on assets and services can now be claimed, improving cash flow, while clearer expense deductibility rules, faster tax refunds, and limits on arbitrary tax assessments are expected to boost investor confidence.
The controversial minimum tax based on turnover, which often penalised struggling companies, has been scrapped. Exit and business reorganisation rules have also been clarified to support corporate restructuring.
Game-Changer for Small Enterprises
Small businesses stand out as major winners. Enterprises with annual turnover below ₦100 million will enjoy:
- Zero percent corporate income tax
- VAT exemptions
- PAYE relief for low-income employees
Oyedele explained that the aim is to encourage formalisation without increasing the tax burden, allowing small businesses access to financing, legal protection, and growth opportunities.
Progressive and Inclusive Taxation
The reforms introduce a more progressive tax structure. While low- and middle-income earners benefit from reduced effective rates and rent reliefs, high-income earners will pay more through an increased top marginal rate, reinforcing equity and shared responsibility.
Crackdown on Evasion and Abuse
To combat tax evasion and aggressive avoidance, the reforms strengthen enforcement through enhanced tax intelligence, stiffer penalties, and alignment with global anti-avoidance standards. Multinational companies engaging in profit-shifting will now face disallowed deductions and top-up taxes to ensure a minimum effective rate of 15 percent.
Administrative Overhaul
A key institutional change is the establishment of the Nigeria Revenue Service (NRS), alongside a strengthened Joint Revenue Board and state tax authorities. Taxpayer rights are reinforced through the Office of the Tax Ombud, while whistleblowing frameworks and public reporting of tax incentives aim to curb abuse and corruption.
The reforms also reduce overlapping taxes, streamline audits, and harmonise tax identification and collection across all tiers of government—offering predictability, especially for multi-state operators and logistics firms.
A New Social Contract
Oyedele summed up the reforms as the beginning of a new social contract, where taxation is no longer viewed as a burden but as a fair contribution to national development.
“If implemented faithfully, these reforms can change how Nigerians see taxation fairer, simpler, and more purposeful,” he said.
