President Tinubu signed four new tax bills into law
Nigerian President Bola Tinubu last week signed four new tax bills into laws, marking the latest chapter in his push to reform the economy of Africa’s most populous nation.
The long-anticipated tax reform is made up of these four critical bills: The Nigeria Tax Bill (Ease of Doing Business), Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.
These bills consolidate Nigeria’s fragmented tax framework into a unified legal structure under the Nigeria Tax Act, repealing 11 major tax statutes, including the Companies Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Capital Gains Tax Act, Petroleum Profits Tax Act, and Stamp Duties Act, among others.
The new bills help to eliminate and override conflicting tax laws to provide a more standardised and streamlined tax regime according to global standards.
According to Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), the new tax laws will take effect on January 1, 2026, under the auspices of the newly established Nigeria Revenue Service.
These are the major changes envisioned by the new tax laws:
Full exemption of VAT on essential goods and services like food, medical services and education, which should cover roughly 60.0% of consumer spending.
Additional VAT exemptions apply to housing rent, property acquisition, transportation, renewable energy, compressed natural gas (CNG), baby supplies, sanitary products, and fuel.
Expansion of the VAT base to include services consumed within Nigeria, regardless of origin, and introducing specific rules for determining taxable periods and non-resident compliance.
Reduction of CIT from 30.0% to 25.0% and introduction of various incentives for priority sectors, including tax credits for income earned abroad
The CIT exemption threshold for small businesses has been pegged at N50.0 million from N25.00 million previously.
Full PAYE exemption for income earners below N1.0 million annually (N83.0k per month), with lower effective tax rates for income earners below N1.7 million per month.
Removal of stamp duty obligations on rent below N10.0 million annually.
Introduction of tax reliefs on wage awards and transport subsidies for low-income earners.
A legal framework has been established for the taxation of lottery and gaming, and digital assets.
The current Pioneer Status Incentive will be phased out and replaced by a new economic development tax incentive supported by improved governance and oversight mechanisms.
Introduction of a 4% development levy to replace levies such as the Tertiary Education Tax, Nigeria Police Trust Fund, National Information Technology Development Agency (NITDA) Levy, National Agency for Science and Engineering Infrastructure (NASENI), etc, which would remove the administrative burden of computing the various levies and interfacing with multiple government agencies.
Exemption of profits from entities in Export Processing Zones from tax if all sales are exports or input supplies for exports, and domestic sales do not exceed 25%, limited to oil and gas buyers. Sales beyond 25% attract tax on domestic profit. From January 1, 2028, all domestic sales will be fully taxable regardless of proportion.
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