President Bola Ahmed Tinubu has signed the much-anticipated Tax Reform Bills into law, ushering in sweeping changes aimed at restructuring Nigeria’s tax system, improving revenue generation, and easing the burden on low-income earners and small businesses.
Key highlights of the new law:
- The Federal Inland Revenue Service (FIRS) has officially been renamed the Nigeria Revenue Service (NRS).
- The newly established NRS will now assume revenue collection duties previously handled by agencies such as the Nigeria Customs Service, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Ports Authority (NPA), and the Nigerian Maritime Administration and Safety Agency (NIMASA).
- Tax exemption has been granted to workers earning ₦800,000 or less annually, effectively shielding low-income earners from tax obligations.
- A new 25% personal income tax rate will apply only to individuals with annual earnings above ₦50 million, targeting Nigeria’s top earners.
- Small business owners are exempted from paying income tax, a move aimed at encouraging entrepreneurship and easing the cost of doing business.
- Starting in 2026, company income tax for medium and large businesses will be reduced from 30% to 25%, offering relief to larger enterprises.
- Value Added Tax (VAT) exemptions will now apply to essential goods and services consumed by low-income Nigerians, including basic food items, medical services, pharmaceuticals, school fees, and electricity.
- The VAT rate remains unchanged at 7.5%, and the corporate income tax rate stays at 30% for companies not affected by the 2026 adjustment—no increases were made.
- A new development levy has been introduced, ranging from 4% to 2%, to fund critical institutions such as NELFUND, TETFund, NITDA, and NASENI.
The signing of the Reform Bills marks a significant milestone in Nigeria’s fiscal policy direction. Analysts believe the reforms are geared toward broadening the tax net, improving efficiency, and making the system more equitable—particularly for the poor and business community.
More details are expected to be released in the coming days by the Federal Ministry of Finance and the newly constituted Nigeria Revenue Service.
