President Bola Ahmed Tinubu has officially signed four major tax reform bills into law, ushering in a transformative era for Nigeria’s tax system. The signing took place on Thursday, June 26, 2025, at the Presidential Villa, Abuja.
Overview of the New Tax Laws
The newly enacted laws are:
1. Nigeria Tax Bill
2. Nigeria Tax Administration Bill
3. Nigeria Revenue Service (Establishment) Bill
4. Joint Revenue Board (Establishment) Bill
These bills were passed by the National Assembly following extensive consultations with stakeholders, including input from the Presidential Committee on Tax Reform chaired by Taiwo Oyedele. The reforms aim to simplify Nigeria’s tax structure, promote fairness, and drive inclusive economic growth.
Tinubu’s Vision for the Reforms
President Tinubu, through a statement on his official X handle, described the laws as a “decisive break from the past,” highlighting their focus on easing burdens for working families, low-income earners, and small businesses.
“These reforms will restore equity in our tax system, bring meaningful relief to ordinary Nigerians, and stimulate inclusive economic development,” he said.
Key Provisions for Individuals
1. PAYE Exemption for Low-Income Earners: Individuals earning up to ₦1 million annually (approx. ₦83,000 monthly) are now completely exempt from PAYE.
2. New Income Tax Brackets:
- ₦800,000: 0%
- ₦2.2 million: 15%
- ₦9 million: 18%
- ₦13 million: 21%
- ₦25 million: 23%
- ₦50 million: 25%
3. Reduced PAYE for Earners Below ₦1.7 Million Monthly
4. 0% VAT on Essentials: No VAT on food, healthcare, education, electricity generation, and transmission.
5. Additional VAT Exemptions: Transportation, renewable energy, CNG, baby products, sanitary towels, rent, and fuel.
6. Tax Breaks: For wage awards and transport subsidies to low-income earners.
7. Incentives for Job Creation: Employers get tax incentives for hiring more people than in the past three years.
8. Stamp Duty Exemption: For rents below ₦10 million.
9. Tax Relief for Security Personnel: PAYE exemption for non-commissioned ranks in the armed forces.
10. Support for Digital Workers: Friendly tax rules for remote workers and digital nomads.
11. Digital Asset Tax Clarity: Clear rules to avoid double taxation and allow for deduction of losses.
Benefits for Small Businesses
1. Increased Tax Exemption Threshold: For businesses with turnover from ₦25 million to ₦50 million.
2. Company Income Tax (CIT) Exemption: Small businesses taxed at 0%.
3. No Withholding Tax: On income earned by small businesses.
4. Simplified Tax Filing: Use of simple statements signed by business owners instead of audited financials.
5. Vendor Tax Relief: Small businesses no longer need to deduct and remit tax on vendor payments.
6. Tax Ombud Creation: To protect businesses from arbitrary assessments.
7. Quick Dispute Resolution: Tax disputes to be settled within 14 days.
8. Harmonised Levies: Elimination of multiple taxes and outlawing of cash-based payments and roadblocks.
9. Incentives for Formalisation: Business-friendly rules to encourage formal registration and growth.
Advantages for Larger Businesses and Investors
1. Corporate Tax Rate Cut: Reduced from 30% to 25%.
2. Tax Credits for Foreign Income: To prevent double taxation and reduce production costs.
3. Incentives for Priority Sectors: To support key areas of the economy.
4. Simplified Business Restructuring: Supportive tax rules for reorganisation.
5. Clear Statute of Limitation: Six-year limit with taxpayer-favorable resolutions if tax authorities fail to respond within 90 days.
6. Naira Option for Foreign Transactions: Flexibility in tax payments for forex-based transactions.
7. Faster Tax Refunds: Within 90 days for regular taxes, and 30 days for VAT, with an option to offset liabilities.
8. Advance Rulings in 21 Days: Clear guidance for future transactions.
9. Start-up Expense Deductions: Costs incurred up to six years before business launch are deductible.
10. Loan Interest Rules Adjusted: Restrictions apply only to related-party loans, reducing financing costs.
Implementation Timeline
Chairman of the Nigeria Revenue Service (NRS), Zach Adedeji, announced that the new tax laws will be fully implemented starting January 1, 2026. He explained that the six-month window before enforcement allows for adequate preparation and public sensitization.
“We are putting modalities in place to ensure smooth implementation. The transition period will help both authorities and the public adapt to the new system,” Adedeji said.
Conclusion
The newly signed tax reforms are poised to modernize Nigeria’s fiscal framework, boost compliance, and provide crucial relief to individuals and businesses alike. With a clear timeline and focus on fairness and inclusivity, the laws represent a significant step toward fiscal sustainability and economic growth.
