Nigeria’s incoming tax laws, scheduled for implementation in January 2026, are set to deliver substantial relief to small businesses and low-income earners, according to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.3 The comprehensive reforms aim to empower Nigerians and address years of “multiple taxes” that crippled the informal sector—which Oyedele described as the “backbone of development.
Zero Tax for Small Businesses
The most significant change targets the corporate tax structure to incentivize formalization and growth:
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Zero Company Income Tax (CIT): Companies with an annual turnover below 100$ million will pay zero CIT.
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Reduced CIT: The standard CIT rate for larger companies will be reduced from 30% to 25% to attract Foreign Direct Investment (FDI).
Oyedele stated that this change provides a strong motivation for informal businesses to formalize, turning a previous tax disadvantage into a substantial benefit.
“If we make life easy for them, the nano becomes micro, micro becomes small, small becomes medium, medium becomes large, and large becomes multinational,” Oyedele said, stressing that inclusive growth felt by all Nigerians comes from the growth of the informal sector.
Relief for Low-Income Earners
The reforms also target relief for individuals to address the regressive tax structure, where low-income earners previously shouldered a disproportionate burden.
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Full Exemption: Low-income earners, who previously paid 96% of income tax, will now be fully exempt from paying income tax starting next year.
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VAT Relief: Individuals earning 100,000$ or below will benefit from VAT relief on essential items.
These reforms are designed to eliminate and harmonize multiple taxes and taxing agencies, tackling Nigeria’s high tax burden on businesses (which ranks among the top ten globally) and moving the country toward a more equitable and competitive fiscal environment.
