President Bola Tinubu reassured Nigerians that the newly introduced tax laws will not add burdens for existing taxpayers but will instead provide relief for low‑income workers. He made this assurance in his address on Nigeria’s 65th Independence Day anniversary. The tax‑to‑GDP ratio has risen to 13.5 percent from less than 10 percent and is expected to increase further when the new tax law takes effect in January 2026. According to President Tinubu, the primary goal of the law is to expand the tax base, relieve low‑income earners, and build a stronger economy.
The new tax laws, slated for implementation in January 2026, aim to consolidate and simplify existing statutes, including the Companies Income Tax Act, the Personal Income Tax Act, the Value‑Added Tax Act, and the Capital Gains Tax Act. This consolidation is intended to reduce ambiguity, eradicate duplication, and address the long‑standing issue of multiple taxes levied by different levels of government. Key features include relief for individuals and small businesses: workers earning less than N800,000 annually will be exempt from personal income tax, and companies with an annual turnover up to N100 million and total fixed assets not exceeding N250 million will be exempt from Company Income Tax, Capital Gains Tax, and the new Development Levy.
The new regime also removes Value‑Added Tax on essential goods and services such as basic food items, educational books and tuition, and shared road‑transport services. It introduces a 4 percent Development Levy that replaces several smaller sundry levies and broadens the tax base to include profits from digital and virtual assets. The Pioneer Status Incentive regime has been replaced by the Economic Development Tax Incentive, offering longer‑duration tax benefits for businesses in qualifying sectors. Companies in the agricultural sector will be exempt from income tax for their first five years of operation, and profits from goods exported from Nigeria will be exempt from income tax provided the proceeds are repatriated through official channels.
The establishment of the Nigeria Revenue Service as the sole body responsible for collecting federally chargeable taxes aims to unify the previously fragmented system. The Nigeria Tax Administration Act introduces a unified procedural framework for tax administration, and an Office of the Tax Ombudsman has been created to resolve complaints and disputes between taxpayers and tax authorities. These developments represent a major overhaul of Nigeria’s tax system, seeking to promote economic growth, reduce inequality, and increase government revenue. As the new tax laws take effect, they are expected to have a profound impact on the country’s economy and its citizens.
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