Oyedele says tax reforms prioritise economic growth, lower business costs over higher taxes…
The Federal Government is set to forgo an estimated ₦1.4 trillion in revenue in 2026 following its decision to reduce the Corporate Income Tax (CIT) rate from 30 per cent to 25 per cent under Nigeria’s newly consolidated tax reform framework.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, disclosed this on Friday during a media workshop on the new tax laws, describing the move as a deliberate policy choice aimed at stimulating economic growth rather than raising additional taxes.
Oyedele revealed that figures from the Federal Inland Revenue Service (FIRS) show that corporate income tax collections stood at approximately ₦8.6 trillion in 2024.
According to him, a five percentage-point reduction from the current tax rate translates to a significant revenue sacrifice by the government.
“If you do the maths, taking away five per cent out of 30 per cent comes to about ₦1.4 trillion. This is essentially the government giving ₦1.4 trillion back to businesses next year,” he said.
Growth, Not New Taxes
Oyedele explained that the tax reforms are built on the principle that sustainable revenue generation depends on economic expansion, not higher tax rates.
He argued that when businesses thrive and employment rises, the tax base naturally expands, whereas excessive taxation discourages productivity and deepens economic slowdown.
“The fastest and most sustainable way to generate revenue is to allow the economy to grow. If I’m unemployed, you can have the best personal income tax law in the world, but you can’t collect tax from me,” he stated.
He added that the new tax framework intentionally avoids introducing new levies, focusing instead on removing bottlenecks, simplifying compliance, and reducing the cost of doing business in Nigeria.
VAT Reforms to Boost Business Cash Flow
Beyond the corporate tax cut, Oyedele disclosed that businesses will benefit further from major reforms to the Value Added Tax (VAT) regime, scheduled to take effect from January 2026.
Under the new law, companies will be allowed to claim input VAT credits on assets, overheads, and services, categories that were previously excluded from VAT refunds.
“You’ve never been able to claim these input credits before because the law didn’t allow it. From January next year, you become eligible. You will actually get money back into your bank accounts,” he said.
These new credits will be added to existing VAT input credits on inventory, which remain unchanged.
Bread, Food Prices Expected to Drop
Oyedele illustrated the impact of the VAT changes using bread production as an example.
Currently, bread is VAT-exempt, meaning bakers do not charge VAT on sales but are unable to recover VAT paid on inputs such as sugar, butter, equipment, vehicles, and utilities. These unrecoverable costs are ultimately passed on to consumers through higher prices.
Under the new framework, bread will become VAT zero-rated, allowing producers to charge VAT at zero per cent while receiving full refunds on VAT paid on inputs.
“What that means is the cost of producing bread will come down,” Oyedele explained.
He noted that the same zero-rating principle now applies to food, education, and healthcare, sectors considered critical to household welfare.
Short-Term Revenue Loss, Long-Term Gains
Oyedele acknowledged that the reforms would lead to reduced government revenue in the short term but insisted the trade-off is intentional and necessary to unlock long-term economic growth.
What You Should Know
Nigeria is undertaking a comprehensive overhaul of its tax system, with key provisions of four new tax reform Acts scheduled to take effect on January 1, 2026.
The reforms aim to simplify tax administration, broaden the tax base, and introduce wide-ranging changes affecting both individuals and businesses.
To oversee implementation, President Bola Ahmed Tinubu has approved the establishment of the National Tax Policy Implementation Committee (NTPIC). The committee will be chaired by Joseph Tegbe, a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN).
