Nigeria’s tax-to-gross domestic product ratio has increased to 13.5 per cent as of September 2025, according to President Bola Ahmed Tinubu. This growth is up from less than 10 per cent previously. The President announced this development during the country’s 65th Independence anniversary broadcast on Wednesday.
President Tinubu emphasized that the federal government’s new tax law, set to take effect in January 2026, aims to expand the tax base rather than increase the burden on existing taxpayers. The law is also intended to provide tax relief to low-income earners. In June 2025, President Tinubu signed four tax bills into law, including the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Bill, and the Joint Revenue Board Bill.
The federal government has assured that low-income earners will be exempt from the new tax laws. However, there are concerns about the implementation of these exemptions from January 2026. According to the Chairman of the Federal Inland Revenue Service, Zacch Adedeji, the new tax law will exempt essential items such as food, education, shared transportation, and agriculture from Value Added Tax.
The increase in the tax-to-GDP ratio and the new tax law are significant developments in Nigeria’s efforts to enhance its revenue generation and economic growth. The government’s goal is to build a more sustainable tax system that supports the country’s development. As the new tax law takes effect in January 2026, it is expected that the tax-to-GDP ratio will increase further, providing more revenue for the government to fund its projects and programs.
The exemption of essential items from Value Added Tax is expected to benefit low-income earners and reduce their financial burden. The government’s assurance that low-income earners will be exempt from the new tax laws is a welcome development, and it is hoped that this exemption will be effectively implemented. The success of the new tax law will depend on its effective implementation and the government’s ability to ensure that the benefits of the tax exemptions are felt by the intended beneficiaries.
