Nigeria’s tax‑to‑gross domestic product (GDP) ratio has risen to 13.5 percent as of September 2025, up from less than 10 percent previously, President Bola Ahmed Tinubu announced during the country’s 65th Independence Day broadcast. He highlighted that the federal government’s new tax law, slated to take effect in January 2026, is designed to broaden the tax base rather than increase the burden on existing taxpayers and to provide relief for low‑income earners.
In June 2025, President Tinubu signed four tax bills into law: the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Bill, and the Joint Revenue Board Bill. The government has assured that low‑income earners will be exempt from the new tax provisions, although concerns remain about how these exemptions will be implemented from January 2026. According to Federal Inland Revenue Service Chairman Zacch Adedeji, the new law will exempt essential items—such as food, education, shared transportation, and agricultural products—from Value Added Tax (VAT).
The rise in the tax‑to‑GDP ratio and the introduction of the new tax law represent significant steps in Nigeria’s effort to strengthen revenue generation and support economic growth. By creating a more sustainable tax system, the government aims to fund development projects and programs more effectively. As the law takes effect, the tax‑to‑GDP ratio is expected to climb further, providing additional resources for public initiatives.
Exempting essential items from VAT is intended to benefit low‑income earners and lessen their financial burden. The government’s commitment to shielding low‑income households from the new tax measures is a welcome development, and its success will hinge on effective implementation and ensuring that the intended beneficiaries truly receive the promised relief.
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