By Rakiya A. Muhammad
Hajiya Maryam Aliyu, a mother of five, hopes Nigeria’s new tax regime will ease burdens for low earners like her.
She also anticipates that the promise of VAT-free for a wide range of essential goods and services will bring relief to families.
“I’m eager for the human touch promised in these reforms,” she says.
With fewer deductions, Hajiya Maryam believes managing household expenses will be easier, allowing families to focus on priorities rather than worries.
This sense of optimism is echoed by others, including small-scale entrepreneurs Ayomide Olayiwola and Precious Chukwudi, who hope for a fairer tax system, citing the small-company exemption. SMEs account for about 48% of Nigeria’s GDP, underscoring the need for tax relief to support their stability and growth.
Ayomide says targeted tax relief could help small businesses thrive by cutting costs. Chukwudi adds that such relief fosters innovation, expansion, and job creation, expressing hope in the reforms.
While Nigerians wait for the changes, attention turns to how the broader public will be impacted.
Navigating New Horizons
As the January 1, 2026, effective date for the Nigeria Tax Reform Acts approaches, many are considering how the new tax landscape will take shape and whether implementation will meet the reforms’ high expectations.
On July 7, 2023, the President Bola Tinubu approved the establishment of a Presidential Committee on Fiscal Policy and Tax Reforms to modernise the country’s tax system, enhance revenue generation, and promote equity.
The committee brought together experts from both the private and public sectors. After nearly two years of consultation and legislative processes, the Tax Reforms Bills have been signed into law, marking a transformative chapter in Nigeria’s fiscal landscape.
On June 26, 2025, President Ahmed Tinubu signed four landmark Tax Reform Bills into law: the Nigeria Tax Act, which sets out rules for taxation; the Nigeria Revenue Service (Establishment) Act, which establishes the body responsible for collecting taxes; the Nigeria Tax Administration Act, which prescribes procedures for tax enforcement; and the Joint Revenue Board (Establishment) Act, which outlines coordination among different tax authorities.
“These laws will unify our fragmented tax system, eliminate wasteful duplications, cut red tape, restore investor confidence, and entrench transparency and coordination at every level,” explains the President at the signing ceremony held at the State House in Abuja.
“We have opened the door for new economic and business opportunities. We are showing that Nigeria is truly ready and open for business.”
Lifting Burdens, Unleashing Potential
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, calls the reforms pro-growth and pro-poor, aiming to boost equity, ease burdens on vulnerable Nigerians, and drive economic development.
“The new laws are designed to end discretionary waivers and ensure that tax incentives are accessible to all qualifying businesses, not just the well-connected,” he illuminates.
“Over one-third of workers in both public and private sectors will now be completely exempt from Personal Income Tax. More than 90% of micro, small, and nano enterprises are also exempt from Corporate Income Tax, VAT, and PAYE obligation.”
He also highlights that small businesses earning less than 100 million naira a year will pay no CIT, giving them a strong incentive to formalise their operations.
An overwhelming majority of investors in the capital markets are tax-exempt, with approximately 99 percent covered, according to committee calculations.
“If you sell not more than 150 million naira of shares in a year and your gains are no more than N10 million, you are exempted,” he expounds. “That threshold covers more than 99 per cent of investors in the market; the remaining investors are less than one per cent.”
Director General, Dr Chinyere Almona, Lagos Chamber of Commerce and Industry (LCCI), sees these reforms as a bold leap forward in Nigeria’s journey toward a transparent, efficient, and growth-focused fiscal system.
She adds: “With essential goods and services now exempt from Value Added Tax (VAT), we expect this move to ease the cost of Living for millions of Nigerians.”
Almona also notes that simplifying Nigeria’s tax laws, alongside digital and institutional upgrades, lays a strong foundation for private-sector growth.
For his part, Smatt Oyerinde, the Director General/Chief Executive of the Nigeria Employers Consultative Association (NECA), expects the reforms to open the economy and foster sustainable, organic growth.
“For organised business, having a harmonised tax regime is encouraging: it allows growth to happen organically, from the bottom up,” he enunciates.
“You don’t grow from the top; you grow from promoting businesses, some that affect MSMES, some that affect SMEs, some that affect big businesses, some that affect individuals; so, it’s a chain reaction that we expect to affect the whole economy together.”
Charles Odii, Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), believes the reform will spur new growth for micro, small, and medium businesses.
“This reform will remove unnecessary regulatory bottlenecks, allowing MSMEs to thrive,” he says. “When small businesses flourish, the entire economy benefits.”
He however notes that many owners are unaware they’re exempt from VAT, CIT, PAYE, and other taxes, and urges greater awareness of this.
With 39,654,385 nano, micro, small, and medium enterprises in Nigeria, he insists that raising awareness is the crucial first step to helping them succeed.
Creating Pathways Across Industries
Olaleye Adebiyi, a renowned tax expert, explains how the reforms open opportunities across industries.
“Zero-rating of essential manufacturing inputs reduces production costs while supporting import substitution objectives,” he points out.
“Manufacturing companies can leverage these incentives to enhance competitiveness while contributing to national development goals.”
He explains that the reforms especially benefit companies focused on value-added production, offering opportunities for vertical integration and supply chain optimisation.
Focusing on agriculture, he notes expanded zero-rating for staples and new agro-processing incentives strengthen food security and spur value in agriculture.
“Companies engaged in food processing benefit from reduced input costs through VAT zero-rating of essential food items,” Adebiyi illuminates.
“The reforms also support export-oriented agricultural activities through improved incentive structure.”
On the Service sector, he articulates: “Service companies benefit from simplified compliance procedures and reduced withholding tax burdens (courtesy of WHT Regulation 2024).
“The digital economy provisions create opportunities for technology-enabled service delivery while ensuring appropriate tax treatment for digital services.”
Adebiyi, however, says thriving under the new tax system demands focus, strategy, and clear compliance plans.
“Successful adaptation requires a structured implementation framework that addresses system upgrades, compliance process modifications, etc.,” he submits.
“The implementation framework must also address stakeholder engagement, including employees, customers, and business partners.”
Clear communication regarding tax-related changes, he emphasises, helps maintain business relationships while ensuring compliance with new requirements.
The tax expert urges companies to build their in-house tax know-how to navigate the new compliance landscape, adding that investing in staff training smoothens the transition.
“The Nigeria Tax Act 2025 signals a new era for the Nigerian tax regime, offering a mix of incentives and obligations that can reshape industrial growth if property is leveraged,” he points out.
“At the same time, the Act demands greater compliance discipline, including mandatory e-invoicing and stricter reporting requirements.”
To fully benefit, Adebiyi advises businesses to act swiftly by reviewing their tax strategies, updating internal systems, and ensuring their teams understand the new rules.
Ahmad Ibrahim Aliyara, a retired Deputy Director of the Federal Inland Revenue Service (FIRS), acknowledges the Nigerian Tax Reform Acts, 2025, represent a bold and necessary step towards modernising the country’s tax regime.
“Individuals with a taxable profit of ₦800,000 or less per year after the relief allowance and exemptions are now completely exempt from paying personal income tax,” he elucidates.
“This measure reduces the burden on Nigeria’s lowest earners and helps align tax obligations with the national minimum wage.”
He observes that a more progressive structure is now in place, with increased marginal tax rates for high-income individuals.
Aliyara points out that raising the exemption threshold for compensation due to job loss or personal injury from ₦10 million to ₦50 million offers greater protection for people facing unexpected hardships.
Balancing the Scales
While the reforms promote fairness, transparency, and economic accountability, the retired revenue official points out, it also brings significant new responsibilities for taxpayers.
“Whether you are a multinational corporation, a local start-up, a family-owned enterprise, or an investor, your continued success depends on understanding these reforms and preparing accordingly,” he underscores.
“The provisions outlined in the Tax Reform Act offer considerable opportunities for revenue optimization; these measures primarily aim to ensure the appropriate taxation of income, profits, and transactions that are rightfully taxable.”
Turning Visions into Reality
To ensure the effective implementation of these provisions, he urges the Government to adopt approaches that strike a balance between efficiency and a minimal taxpayer burden.
“Specifically, the enforcement of minimum tax provisions should be carefully structured to avoid negatively impacting investment and profitability,” he advises.
Analyst Ann Christopher describes the combined impact of the new tax laws as transformative—supporting economic growth and easing daily life.
“The tax reforms introduce a transformative approach aimed at fostering economic fairness and social well-being through a human-centred lens,” she notes
“These measures reflect a thoughtful shift towards a simpler, fairer tax system that prioritises the needs of ordinary citizens; they embody the promise of a human touch in policymaking—creating a more equitable society that values dignity, health, and economic stability for all.”
She adds that by easing financial pressures on essential goods and supporting vulnerable groups, the reforms promise to open access to basic services, boost consumer spending, and drive broad economic growth.
“These reforms are a spark for economic growth, fairness, and social well-being, yet there is a need for careful execution to bring real change for Nigerians and their businesses,” she points out, noting the need to create transparency dashboards to monitor progress and hold leaders accountable for delivering on reform promises.
