The Federal Government has unveiled a sweeping reform of Nigeria’s tax framework, signaling a major policy shift away from a “punitive and complex” system toward one designed for fairness, household purchasing power, and business growth. The plan, which takes effect from January next year, is set to directly benefit low- and middle-income workers while significantly easing the corporate tax burden.
Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, described the current system as “taxing poverty,” lamenting that Nigerians struggling to meet basic needs are forced to pay tax.
The People’s Relief: Boosting Take-Home Pay
The core of the personal income tax reform is targeted at reinforcing household purchasing power amid the rising cost of living:
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Exemption for Low-Income Earners: Workers earning N100,000 or less per month will be fully exempted from Personal Income Tax. This exemption is expected to affect roughly one-third of Nigeria’s workforce.
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Middle-Class Relief: Individuals earning between N100,000 and approximately N2 million per month will also pay less tax, effectively increasing their disposable income. Oyedele stressed that protecting the middle class is vital for consumption, savings, and long-term economic stability.
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Marginal Increase for Top Earners: The highest earners (estimated at only 2% of the working population) will shoulder a slightly higher share. A new top Personal Income Tax rate of 25 per cent will apply exclusively to those earning N120 million or more annually, aimed at restoring balance rather than punishing success.
The Business Boost: Cutting Corporate Tax
The reforms aggressively tackle Nigeria’s position as one of the global top 10 countries with the highest tax burden on businesses—a severe hurdle for investment and job creation.
| Business Category | Old Corporate Tax Rate | New Corporate Tax Rate | Policy Goal |
| Small Businesses (Turnover < N}100$ ) | N/A | 0% | Encourage formalization and expansion |
| General Rate | 30% | 25% | Improve business environment; attract investment |
These measures are intended to simplify the system, encourage informal enterprises to formalize their operations, and make Nigeria more competitive for desperately needed domestic and foreign capital.
