President Bola Tinubu on Thursday afternoon signed four critical tax reform bills into law, signalling a major shift in Nigeria’s approach to fiscal management.
In a statement on X, formerly known as Twitter, the president said the bills marked “a new dawn in Nigeria’s economic governance”.
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“These new laws simplify our tax regime and deliver Nigeria’s first major, pro-people tax cuts in a generation. They also provide targeted relief for low-income earners, small businesses, and working families across the country,” Tinubu said.
The move follows months of legislative process and stakeholder engagement and is part of broader efforts to simplify the country’s complex tax system, enhance revenue generation, and foster a more predictable business environment.
The newly signed laws are the Nigeria Tax Bill (Ease of Doing Business), the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.
In this report, EKO HOT BLOG breaks down what each law entails and what it means for Nigerians.
Nigeria Tax Act (Ease of Doing Business)
This act consolidates multiple, often overlapping tax statutes into a single, harmonised legal framework. It aims to reduce the multiplicity of taxes and eliminate redundant provisions that have long made tax compliance a burden for businesses operating in Nigeria.
It is designed with the private sector in mind, offering a more transparent and predictable tax regime. Businesses, especially small and medium enterprises, are expected to benefit from reduced compliance costs and less administrative complexity.
This act tackles one of the most persistent complaints from investors and entrepreneurs: Nigeria’s confusing and overlapping tax structure. By harmonising the rules and reducing duplicative levies, the law could ease barriers to entry for new businesses and improve the investment climate.
However, the actual benefit will hinge on how thoroughly state and local governments align with this unified framework.
Nigeria Tax Administration Act
The Tax Administration Act creates a standard legal and operational framework for tax administration across the federal, state, and local levels. It seeks to streamline responsibilities among different tax authorities, resolve jurisdictional conflicts, and ensure uniformity in tax practices.
It introduces a coordinated system where revenue agencies at all levels can operate with greater clarity, reducing friction in enforcement and improving service to taxpayers.
More importantly, this act addresses a core dysfunction in Nigeria’s tax system: competition and confusion between federal and state tax bodies. If properly implemented, it will reduce legal battles and administrative overlaps that slow down tax collection and frustrate businesses.
But success will depend on cooperation from state governments, some of whom have previously pushed back against federal oversight.
Nigeria Revenue Service (Establishment) Act
This law repeals the existing Federal Inland Revenue Service (FIRS) Act and establishes a new body: the Nigeria Revenue Service (NRS). Unlike the FIRS, the NRS is designed to be more autonomous and performance-driven. It will oversee both tax and non-tax revenue collection, with mechanisms in place to ensure transparency and accountability.
The new service is expected to adopt modern operational standards, including performance metrics and enhanced reporting systems.
Creating a single, high-capacity revenue agency could dramatically improve Nigeria’s revenue performance if the NRS lives up to its mandate. Autonomy is crucial, but so is governance. Some have observed that replacing one agency with another only works if the institutional culture changes.
Joint Revenue Board (Establishment) Act
This act sets up a formal body to coordinate revenue efforts across all levels of government. It also provides for the creation of a Tax Appeal Tribunal and an Office of the Tax Ombudsman, two mechanisms aimed at ensuring taxpayer rights are protected and grievances are fairly addressed.
The board will facilitate dialogue, policy alignment, and joint action among federal, state, and local tax agencies.
The institutionalisation of a Joint Revenue Board is perhaps the most significant governance innovation in the reform package. By creating a formal platform for intergovernmental coordination, the bill could bring order to Nigeria’s fragmented revenue ecosystem.
The addition of taxpayer redress mechanisms signals a shift toward a more customer-focused tax regime, but like other aspects of the reforms, its impact will depend on execution and political buy-in.
Meanwhile, More Nigerians Will Pay Less Tax
The new laws will lower the tax burden for low-income earners. Under the former tax regime, anyone earning less than N300,000 annually was not taxed.
But once income reached N300,000, a 7% rate kicked in, resulting in a N21,000 tax. Higher income brackets attracted steeper rates, reaching as high as 24% for those who earned above N3.2 million.
Under the new structure, the tax-exempt threshold has been raised to N800,000 per year. Anyone earning that amount and below will pay no income tax.
For those earning between N800,000 and N3 million, the first N800,000 remains tax-free, while the next N2.2 million is taxed at 15%. That amounts to N330,000, at the upper limit.
For incomes between N3 million and N12 million, the first N3 million is taxed at N330,000, and the next N9 million is taxed at 18%. The 18% translates to an additional N1,620,000. By implication, those at the upper limits of that tax bracket will pay N1,950,000 in total.
For those who earn between N12 million and N25 million, the first N12 million is taxed at N1,950,000, and the next N13 million is taxed at 21%. This adds N2,730,000 and brings the total tax to N4,680,000.
For those earning between N25 million and N50 million, the first N25 million is taxed at N4,680,000, and the next N25 million is taxed at 23%. The 23% adds N5,750,000 and brings the total to N10,430,000.
Finally, anyone earning above N50 million pays N10,430,000 on the first N50 million and 25% on anything above that.
In 2023, Intelpoint, a research and analytics company, found that only 10% of Nigerians earned above N100,000 monthly. As a result, more Nigerians would be automatically exempt from paying personal income tax.
Furthermore, the bills proposed that Nigerians pay 0% VAT on essential items such as food, healthcare and education. Public transport, house rent and renewable energy products are also exempted.
These items make up the bulk of spending for most Nigerians and were spared to ease the cost of living. Lawmakers retained this proposition.
Tax ID Is Now Mandatory For All Banking Services’ Users
By interpretation, the tax reform laws mandate all Nigerians to have a tax identification profile. According to the bill, tax identification will be a precondition for many routine transactions.
To open or operate a bank account, sign a contract with a government agency, or access financial services like insurance and stock trading, a tax ID must be provided.
Tax authorities are also empowered to assign tax IDs automatically to eligible individuals who fail to register on their own, effectively ending the possibility of staying off the tax radar.
Nigerians To Pay Taxes On Crypto
The new laws bring Nigeria in line with modern financial realities by including digital assets in the tax net. Crypto assets, non-fungible tokens (NFTs), and other digital representations of value are now classified as taxable property.
This applies to both residents and non-residents who make gains from selling or exchanging digital assets in Nigeria. While the 2023 Finance Act had already recognised digital assets as chargeable, this new law strengthens enforcement and ensures that tax applies to all qualifying digital transactions.
Together, the four tax reform laws represent a major structural shift that could reshape how Nigeria raises and manages public funds.
FURTHER READING
Implementation of the tax laws are expected to commence on January 1, 2026.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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