Know your new tax laws

President Bola Ahmed Tinubu has signed into law four major tax reform bills, marking a significant shift in how taxes will be collected, paid, and administered in Nigeria.

The reforms, which take effect from January 1, 2026, aim to simplify the tax regime, reduce multiple taxation, and provide relief to low-income earners and small businesses.

The four laws, the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act, are expected to standardise and modernise Nigeria’s tax landscape.

According to Arabinrin Aderonke Atoyebi, Technical Assistant on Broadcast Media to the Executive Chairman of the Federal Inland Revenue Service, the Nigeria Tax Act simplifies the system by combining several outdated tax laws.

“Unnecessary taxes have been removed, and paying multiple taxes on the same income or goods is no longer allowed,” she said in a recent commentary.

All tax authorities across federal, state, and local levels are now mandated to follow consistent rules nationwide.

“Whether you live in Lagos or anywhere else, tax officers are required to apply the same standards,” Atoyebi added, emphasising that the reform would end confusing and overlapping tax demands.

VAT Exemptions on Essentials to Ease Cost Burden

While the VAT rate remains at 7.5%, the law exempts or zero-rates essential goods and services like food, rent, education, healthcare, and public transport.

Atoyebi noted that these changes were designed “to reduce the cost burden on Nigerians.”

Businesses will now benefit from a strengthened input VAT system, allowing them to claim credits on VAT already paid.

“This prevents double taxation and encourages business growth,” she said.

Additionally, all taxpayers are now required to obtain a Tax Identification Number (TIN) to enhance transparency and facilitate easier compliance.

New Revenue Agency and Appeal Tribunal Established

Replacing the Federal Inland Revenue Service, the Nigeria Revenue Service (NRS) will collect all federal taxes, fees, and levies, and introduce digital platforms for registration, filing, and payments.

“This modernisation is expected to reduce delays, errors, and opportunities for corruption,” Atoyebi stated.

The Joint Revenue Board will coordinate tax policies across tiers of government and introduce uniform standards to reduce conflict.

Importantly, two new institutions, the Tax Appeal Tribunal and the Office of the Tax Ombuds, will ensure taxpayer rights are protected and disputes are fairly resolved.

Low-Income Earners and SMEs Get Tax Relief

One of the most direct benefits to citizens is the exemption from personal income tax for individuals earning below ₦800,000 annually.

Small and medium-sized businesses will also see simplified compliance procedures and reduced burdens.

“These measures aim to support growth and ease the pressure on small traders and entrepreneurs,” Atoyebi affirmed.

With the implementation set for January 2026, the government plans a nationwide awareness campaign and capacity-building for tax officials to ensure a smooth transition.

“The Renewed Hope administration belongs to every Nigerian. So, congratulations to all Nigerians for stepping into this new era. Together, we are building a Nigeria that works for everyone,” she concluded.