Nigeria has announced a set of tax reforms that will take effect on January 1, 2026, aimed at easing the burden on low‑income earners, average taxpayers, and small businesses. Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said the measures will introduce a range of exemptions and tax reductions.
Individuals earning the national minimum wage or less, as well as those with an annual gross income of up to ₦1,200,000, will receive tax relief. For earners with annual incomes of up to ₦20 million, the Pay‑As‑You‑Earn (PAYE) tax rate will be reduced. Gifts will also be exempt from taxation. Additional deductions will be permitted for pension contributions, national health insurance, and national housing fund contributions. Rent relief of up to 20 % of annual rent, capped at ₦500,000, will be available, and pensions and gratuities—including pension funds and assets covered by the Pension Reform Act—will be tax‑exempt.
The reforms will also provide exemptions on capital gains tax for the sale of owner‑occupied houses, personal effects, and shares below a specified threshold. Small companies with turnover not exceeding ₦100 million and total fixed assets under ₦250 million will be exempt from company income tax. Start‑ups, agricultural enterprises, and venture capitalists will benefit from tax holidays and other exemptions. Development levy and withholding tax will be waived for small firms, while basic food items, education services, and healthcare services will attract a 0 % value‑added tax (VAT) rate. Moreover, small companies with turnover up to ₦100 million will be exempt from charging VAT, and refunds will be available for VAT paid on assets and overheads used to produce VAT‑exempt goods and services.
These reforms are expected to have a significant impact on the Nigerian economy by providing relief to low‑income earners and small businesses, stimulating growth, increasing employment, and reducing poverty. As the measures are implemented, careful monitoring will be essential to assess their effectiveness and overall economic impact.
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