The Federal Inland Revenue Service (FIRS) has moved to allay concerns over a proposed 4 percent development levy on imported goods, stating that it will not increase the tax burden on businesses. In a statement, the agency clarified that the levy is a consolidation of existing charges aimed at simplifying the tax system and enhancing the business environment.
The FIRS attributed public concerns over the Nigeria Tax Act and the Nigeria Tax Administration Act to misinterpretations, particularly regarding the new levy structure. The agency explained that the reform is designed to improve economic competitiveness, protect existing incentives, and ensure long-term fiscal stability. By merging multiple levies into a single charge, the FIRS aims to reduce compliance costs, eliminate unpredictability, and put an end to overlapping charges from different government agencies.
The new levy, set to take effect in January 2026, has raised fears among businesses that it could increase their financial burden. However, the FIRS has assured that small businesses and non-resident companies will be exempt, providing relief for vulnerable and economically sensitive entities. This exemption is expected to protect firms that are most susceptible to economic shocks.
The clarification comes as the Nigerian government seeks to implement a new tax framework, which has sparked concerns among businesses and stakeholders. The FIRS has emphasized that the consolidation of levies will simplify the tax system, making it easier for businesses to comply with tax regulations. The agency’s move is also expected to improve the country’s economic competitiveness and attract foreign investment.
The introduction of the 4 percent development levy is part of a broader effort to reform Nigeria’s tax system, which has been criticized for being complex and opaque. The FIRS has stated that the new levy will replace multiple existing charges, reducing the administrative burden on businesses and increasing transparency. As the implementation date approaches, the agency is expected to provide further guidance and support to businesses to ensure a smooth transition.
The FIRS’ clarification has provided some reassurance to businesses, which had expressed concerns over the potential impact of the new levy on their operations. However, some stakeholders have called for further clarification and consultation on the implementation of the new tax framework. As the Nigerian government continues to push forward with its tax reform agenda, it remains to be seen how the new levy will affect businesses and the broader economy.