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President Bola Tinubu on Thursday signed four new tax reform bills into law, declaring that it signals Nigeria’s readiness for modern economic growth and international investment.
The four bills include the Nigeria Tax Bill (Fair Taxation), Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.
According to the President, “They will unify our fragmented tax system, eliminate wasteful duplications, cut red tape, restore investor confidence, and entrench transparency and coordination at every level.”
The Executive Chairman of the National Revenue Service (formerly the Federal Inland Revenue Service), Zacch Adedeji, has announced that the newly signed tax reform bills will take effect on January 1, 2026.
He explained, “Based on best practices globally, because when you have this kind of change, it takes time for all the stakeholders, participant operators, and even the regulator to change the system. So with the magnanimity of the National Assembly, Mr. President, the effective date will be January 1, 2026, by the special grace of Almighty God.”
“We have opened the door for new economic and business opportunities. We are showing that Nigeria is truly ready and open for business. Easy in, easy out,” said Tinubu at the signing ceremony held at the State House in Abuja.
For his part, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, described the newly signed tax laws as “pro-poor,” saying they will ease the burden on low-income earners, small business owners, and everyday Nigerians.
He said, “More than 1/3 of workers in both the private and public sectors will now be exempted completely from PAYE. They will not have to pay personal income tax. Small businesses, over 90 per cent of small and micro, nano businesses, we no longer have to worry about paying corporate income tax or charging VAT or even deducting withholding tax or paying PAYE for their employees.”
Oyedele added that the reforms will leave “more money in the hands of the ordinary Nigerian to take care of their daily needs,” and announced a new zero‑rate VAT framework on essential items.
“Any traces of VAT in food, in education, in medical and health care are now removed completely, so we should see prices of those items come down.” Oyedele explained.
He also emphasised relief for sectors where households spend most, clarifying that
“transportation, accommodation and housing is exempt from VAT… collectively account for more than 80 per cent of where Nigerians spend their money. That’s a huge relief for them.”
WHAT THE TAX LAW SAYS AND IT AFFECTS LOW INCOME EARNERS AND SMALL BUSINESSES
SUBNATIONAL GOVERNMENTS
1. Federal government to cede 5% of VAT revenue to states.
2. Transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties.
3. Repeal of the obsolete stamp duties law and re-enactment of a simplified law to enhance the revenue for states.
4. States to be entitled to the tax of Limited Liability Partnerships.
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5. Tax exemption for state government bonds to be at par with federal government bonds.
6. More equitable model for VAT attribution and distribution.
7. Integrated tax administration to provide tax intelligence to states, strengthen capacity development and collaboration, and scope of Tax Appeal Tribunal to cover taxpayer disputes on state taxes
8. Powers for AGF to deduct taxes unremitted by a government or MDA and pay to the beneficiary government.
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9. Framework to grant autonomy for states Internal Revenue Service and enhanced Joint Revenue Board to promote collaborative fiscal federalism.
10. Legal framework for taxation of lottery and gaming, and introduction of withholding tax.
BENEFITS FOR HOMES AND INDIVIDUALS
1. Complete exemption of low-income earners up to Nim per annum (about N83k per month) from PAYE.
6. Tax incentives for employers to hire more people incrementally than in the previous 3 years.
2. Reduced PAYE tax for those earning a monthly salary of N1.7m or less.
7. Exemption of stamp duties on rent below N10m.
3. Zero (0%) VAT on food, healthcare, education, electricity generation and transmission.
8. PAYE tax exemption for other rank and armed forces fighting insecurity.
4. VAT exemption on transportation, renewable energy, CNG, baby products, sanitary towels, rent and fuel products.
9. Friendly tax rules for remote workers and digital nomads.
5. Tax break for wage award and transport subsidy to low-income earners.
10. Clarity on taxation of digital assets to avoid double taxation and allow deduction for losses.
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BENEFITS FOR SMALL BUSINESSES
1. Increase in tax exemption threshold for small businesses from annual turnover of N25m to N50m.
6. Introduction of the Office of Tax Ombud to protect taxpayers against arbitrary tax assessments.
2. Exemption from company income tax for small businesses (tax at 0%)
7. Tax disputes affecting businesses to be resolved within 14 days by the Tax Ombud.
3. No withholding tax deduction on business income of small businesses.
8. Harmonisation of taxes and repeal of multiple levies.
4. Exemption from the requirement to deduct and account for tax on payments to vendors.
9. Outlaw cash payment and physical roadblocks imposing burden on businesses.
5. Simplified statement of accounts attested to by small business owner for tax returns in place of audited financial statements.
10. Attractive tax regime to encourage formalisation of encourage business and facilitate growth.
BENEFITS FOR BUSINESSES AND INVESTMENTS
1. Reduction of corporate income tax rate from 30% to 25% and harmonisation of earmarked taxes at a reduced rate.
2. Unilateral tax credit for income earned abroad to avoid double taxation and input VAT credit on assets and services to reduce cost of production.
3. Introduction of economic development incentive for priority sectors.
4. Friendly tax regime for business restructuring and reorganisation to improve efficiency.
5. Clarity on 6-years statute of limitation and resolution of objections in favour of taxpayer if tax authority fails to respond within 90 days.
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6. Option to pay taxes and levies on foreign currency denominated transactions in Naira.
7. Faster tax refunds within 90 days (30 days for VAT refunds) with the option of set-off against any tax liability of the taxpayer.
8. Request for advance ruling by taxpayer to be provided by tax authority within 21 days.
9. Expense incurred by a start-up within 6 years pre commencement of business to be tax deductible.
10. Restriction of interest deduction will only apply to related party loans in order to reduce cost of finance for businesses.
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