President Bola Ahmed Tinubu has officially signed four critical tax reform bills into law, ushering in what the government describes as a transformative era for Nigeria’s tax system. The signing ceremony took place on Thursday, June 26, 2025, at the Presidential Villa in Abuja.
Four New Tax Laws Introduced
The newly enacted laws include:
1. Nigeria Tax Bill (Ease of Doing Business)
2. Nigeria Tax Administration Bill
3. Nigeria Revenue Service (Establishment) Bill
4. Joint Revenue Board (Establishment) Bill
According to a statement by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, the bills were passed by the National Assembly after extensive consultations with stakeholders, including tax experts, business leaders, and economic policy professionals.
Background and Controversies
These reforms stem from recommendations made by the Presidential Tax Reform Committee, chaired by tax expert Taiwo Oyedele. The committee’s proposals were forwarded to the National Assembly earlier this year.
However, the bills sparked criticism from some quarters, notably the Northern Governors’ Forum, who opposed aspects of the proposed VAT (Value Added Tax) derivation model. They expressed concern that the new formula could disproportionately benefit states that generate higher VAT revenue.
President Tinubu: “A Fair and Modern Tax Regime”
In a post shared on X (formerly Twitter), President Tinubu emphasized the administration’s vision for a transparent, fair, and development-focused tax system.
“We are laying the foundation for a tax regime that is fair, transparent, and fit for a modern, ambitious Nigeria. A tax regime that rewards enterprise, protects the vulnerable, and mobilises revenue without punishing productivity,” Tinubu stated.
“We are also building a framework for the Nigeria of tomorrow — leaner, fairer, and laser-focused on unlocking opportunities for all.”
Key Highlights of the New Tax Laws
Personal Income Tax Adjustments
Individuals earning less than ₦1 million per annum** are now exempt from paying income tax.
Revised income tax brackets:
- ₦800,000 — 0%
- ₦2.2 million — 15%
- ₦9 million —18%
- ₦13 million — 21%
- ₦25 million — 23%
- ₦50 million — 25%
This replaces the previous threshold where individuals earning as low as ₦300,000 annually paid up to 7% in income tax.
Corporate and Business Tax Provisions
Small businesses with an annual turnover below ₦50 million are exempt from Company Income Tax.
The general Corporate Income Tax rate remains at 30%.
Compensation and Exemptions
Individuals receiving compensation (e.g., severance payments) under ₦50 million are exempt from income tax.
Value Added Tax (VAT) Reforms
VAT remains at 7.5%
Zero-rated VAT now applies to essential items including:
- Food
- Education
- Healthcare
- Rent
- Public transportation
- Renewable energy
This measure is intended to cushion the impact of taxation on low-income households who spend the bulk of their earnings on these essentials.
Structural Changes to Revenue Agencies
The new laws also introduce institutional reforms: The Federal Inland Revenue Service (FIRS) will be replaced by the Nigeria Revenue Service. The Joint Tax Board will be succeeded by the Joint Revenue Board.
New VAT Revenue Sharing Formula
- 50% of VAT revenue will go to state governments
- 35% to local governments
- 15% to the federal government
For the state share:
- 50% will be distributed based on equity
- 30% on derivation(origin of VAT collection)
- 20% on consumption
Conclusion
The newly signed tax laws represent a major overhaul of Nigeria’s fiscal framework, aimed at boosting revenue while promoting fairness, protecting the poor, and encouraging enterprise. With implementation now imminent, all eyes will be on how these reforms reshape economic behavior across Nigeria.
