In a sweeping overhaul of Nigeria’s tax system, President Bola Ahmed Tinubu has signed the long-awaited Tax Reform Bills into law—ushering in major structural changes designed to simplify tax administration, ease the burden on low-income earners and small businesses, and boost national revenue collection.
Here’s a breakdown of what the reforms mean for the economy, taxpayers, and the business community:
1. Federal Inland Revenue Service Gets a New Identity
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The Federal Inland Revenue Service (FIRS) will now be known as the Nigeria Revenue Service (NRS).
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Beyond a name change, the NRS is set to become a centralized powerhouse, taking over revenue collection duties from agencies like:
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Nigeria Customs Service (NCS)
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Nigerian Upstream Petroleum Regulatory Commission (NUPRC)
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Nigerian Ports Authority (NPA)
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Nigerian Maritime Administration and Safety Agency (NIMASA)
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This consolidation aims to reduce duplication, improve efficiency, and close leakages in government revenue.
2. Tax Relief for Low-Income Earners and Small Businesses
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Workers earning ₦800,000 or less annually will now be fully exempted from personal income tax.
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Small business owners will no longer be required to pay income tax—removing a key burden for Nigeria’s large informal sector and startup community.
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Personal income tax of 25% will now apply only to individuals earning over ₦50 million annually, focusing tax pressure on high earners.
3. Corporate Tax Reforms for Medium and Large Businesses
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While corporate income tax remains at 30% for now, a reduction to 25% is scheduled for 2026, targeting medium and large companies. This move is expected to stimulate investment and competitiveness in the private sector.
4. No New VAT Burdens – But More Protection for the Poor
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VAT remains at 7.5%, and there is no increase in corporate tax, providing certainty and stability for businesses.
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However, VAT exemptions are being expanded to cover essential goods and services frequently consumed by lower-income Nigerians, such as:
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Basic food items
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Pharmaceuticals
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Medical services
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Educational fees
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Electricity
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These exemptions are aimed at protecting vulnerable populations from inflation and over-taxation.
5. A New Development Levy to Fund Innovation and Education
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A Development Levy, ranging from 4% to 2%, will be introduced.
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The proceeds will support key national institutions like:
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NELFUND (Student Loan Fund)
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TETFund (Tertiary Education Trust Fund)
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NITDA (National Information Technology Development Agency)
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NASENI (National Agency for Science and Engineering Infrastructure)
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This new levy is intended to channel more funds into human capital development, innovation, and digital transformation.
The Bigger Picture
These reforms represent the most significant restructuring of Nigeria’s tax framework in decades. For entrepreneurs, investors, and everyday citizens, they could signal:
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A more transparent and predictable tax environment
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Reduced burdens on small businesses and low-income earners
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A strategic focus on innovation, education, and national productivity
While implementation will be key, the legal foundation is now laid. All eyes will be on how the NRS and related institutions carry forward this ambitious agenda.
