Tinubu Linchpin Taxation: Discover the Key Changes in Nigeria’s Tax System

By Olisemeka Obeche

In a bold move that could reshape Nigeria’s socio-economic and political landscape, President Bola Ahmed Tinubu has officially signed the Tax Reform Bills into law, ushering in an era of unprecedented change.

Expectedly, Nigerians are poised to experience the ripple effects of this significant overhaul of the tax system, stirring both anticipation and uncertainty.

The reason is not far-fetched: this comprehensive reform aims not only to streamline revenue collection but also to alleviate the tax burden on low-income earners while ensuring that high-income individuals contribute their fair share.

As these new regulations take effect, it is vital for every Nigerian to understand how this legislative shift will influence their wallets, businesses, and the economy as a whole.

As a Nigerian citizen, it is essential to understand how these changes directly impact you.

Firstly, it is important to note that the Federal Inland Revenue Service (FIRS) has undergone a name change and is now recognized as the Nigeria Revenue Service (NRS).

In line with this rebranding, the NRS will take on a broader role by handling revenue collections that were previously managed by several agencies, including the Nigeria Customs Service, NUPRC, NPA, and NIMASA. This unified approach aims to streamline revenue collection processes and enhance accountability.

Another key features of the new law is the provision for low-income relief. Notably, workers who earn ₦800,000 or less annually will now be exempt from income tax, offering substantial financial relief to many Nigerians.

Conversely, for high-income earners, the legislation introduces a personal income tax of 25% that applies solely to individuals earning above ₦50 million annually. This targeted tax structure is designed to ensure that those with higher income levels contribute fairly to national revenue.

Furthermore, the new law includes a significant benefit for small business owners. It grants them a complete exemption from paying income tax, which aims to encourage entrepreneurship and stimulate economic growth.

In addition to these provisions, there is a notable change concerning corporate taxation. Starting in 2026, the company income tax rate for medium and large firms will be reduced from 30% to 25%. This tax cut is expected to foster a more favorable business environment and attract investment.

Additionally, the law addresses value-added tax (VAT) exemptions on essential goods and services. Under the new regulations, there will be no VAT on essential items such as food, medical services, pharmaceuticals, school fees, and electricity, further easing the financial burden on citizens.

Importantly, there will be no increase in the current VAT rate of 7.5%, nor will the corporate income tax remain at 30%. This stability in tax rates is designed to provide a predictable framework for taxpayers.

Lastly, a new Development Levy has been introduced, ranging from 2% to 4%. This levy will be dedicated to funding critical national institutions, such as NELFUND, TETFund, NITDA, and NASENI, ensuring that essential services and development initiatives receive adequate financial support.

On the face value, these tax reforms represent a significant shift in Nigeria’s taxation landscape, with numerous implications for individuals and businesses alike. However, whether implementation of the new tax regime will draw down the much acclaimed eldorado remains to be seen.

Effective implementation of Nigeria’s new tax law is crucial for ensuring that its intended benefits truly reach the masses and the system as promised. It is imperative that government authorities, tax administrators, and stakeholders come together to foster transparency, accountability, and efficiency in the execution of this law.

We must advocate for robust monitoring mechanisms that ensure tax revenues are allocated toward crucial public services, infrastructure, and social welfare programs that directly impact the lives of everyday Nigerians.

Let us unite in our call for sustained engagement, education, and involvement in the tax reform process to create an equitable and prosperous society for all. Together, we can ensure that the promises of this tax law translate into real improvements for our communities.