NEW TAX REGIME AND MATTERS ARISINGThe new tax laws are good pieces of legislation

In a bold policy initiative that may change the business landscape in Nigeria, President Bola Tinubu has signed into law four tax reforms bills recently passed by the National Assembly. The new laws are the Nigeria Tax Act, which is expected to guide the fiscal framework for taxation in the country by merging dozens of tax laws; the Tax Administration Act, which provides a clear and concise legal framework for all taxes by federating units in the country (federal, state, and local governments); the Nigeria Revenue Service (Establishment) Act, which repeals the Federal Inland Revenue Service (FIRS) Act and establishes the Nigeria Revenue Service (NRS), and the Joint Revenue Board Establishment Act, which is expected to improve co-ordination between all levels of government in the country, aside creating offices for both a tax tribunal and tax ombudsman.

The objectives of the new laws include enhancing revenue collection efficiency, ensuring transparent reporting, promoting the effective utilisation of tax to boost citizens’ tax morale, and fostering a healthy tax culture by driving voluntary compliance. In assenting to the bills, the president spoke about how his administration is showing the world that Nigeria is ready for business, but talk is cheap. It is one thing to have laws, it is another thing to implement the provisions diligently and ensure strict compliance by all stakeholders. That has always been the challenge in Nigeria.

Under the new tax regime, there are gains for small business owners whose annual turnover is below N100 million. They would no longer be required to pay company income tax. They will also only need to file simpler returns. Even big businesses will benefit from simplified and fairer processes. These businesses will also now be able to claim credits for the Value Added Tax (VAT) paid on expenses and assets, which means that they can get back the 7.5 per cent that would have been paid as VAT. Low-income earners will benefit from reduced tax rates and essential goods and services such as food, healthcare, rent, education, and energy will also no longer attract VAT. Of course, the rich will pay higher income taxes under the new tax regime but overall, it is better than what previously obtained.


Considering how emotive and contentious tax administration has always been in the country, we commend all the efforts that led to passing the laws. It is recalled that governors of the 19 northern states, under the platform of the Northern Governors’ Forum (NGF), once rejected the proposal to alter the sharing formula for VAT. Then the National Economic Council (NEC), chaired by Vice President KashimShettima and comprising all the 36 governors, asked the president to withdraw the bills before the National Assembly to pave the way for more comprehensive consultation with key stakeholders in the country. The political actors were able to reach an accommodation, paving the way for the eventual passage and assent of the tax laws.

However, assenting the tax laws comes against the backdrop of two critical reports on the state of the nation. The first, a new 2025 Nigeria Country Focus Report by the African Development Bank (AfDB) has revealed that the country’s tax-to-GDP ratio remains among the lowest in the region, estimated at around 13 per cent. This, according to the report, reflects a large informal economy, weak tax compliance, and inefficiencies in public finance administration. “These constraints not only widen the development finance gap but also stunt the broader economic transformation process,” the report stated. “Tackling them requires a strategic overhaul — streamlining administrative processes, enforcing robust anti-corruption measures, developing digital infrastructure, and reinforcing the rule of law.”

While most of these issues will hopefully be addressed when the new tax laws take effect from January 2026, there is also a post-COVID survey by the World Bank which listed Nigeria among 39 economies classified as being in Fragile and Conflict-affected Situations (FCS). This, according to the Bank, has resulted in acute hunger and deprivations that have pushed several key development goals farther out of reach.

 Combined, what the two reports signify is that beyond the issue of revenue is the deficit in good governance. They should be properly addressed.

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Under the new tax regime, there are gains for small business owners whose annual turnover is below N100 million. They would no longer be required to pay company income tax