The full implementation of the new Nigerian Tax Acts is expected to reshape government revenue, investor confidence and everyday tax experience of businesses and citizens across the country. Assistant Editor Nduka Chiejina reports
By the time Nigeria’s new tax laws were passed and signed into law on June 26, 2025, the long road to that moment had already become a national conversation. It was a journey shaped by politics, public concern, policy adjustments and a deep debate about what fair taxation should look like in Africa’s largest economy.
For many years, Nigeria’s tax system had a poor reputation among businesses and investors. It was often described as confusing, crowded with too many laws, and filled with different agencies collecting similar charges. Many business owners felt that those who tried to comply with the rules were punished more than those who avoided them. Small businesses complained about heavy costs, while low-income earners said the system placed too much pressure on them. At the same time, investors said the uncertainty discouraged long-term planning and investment.
At the centre of the reform effort was the Presidential Fiscal Policy and Tax Reforms Committee, led by Taiwo Oyedele. The committee made it clear that the goal was not simply to collect more money for government, but to rebuild the system itself.
“Public debate is important for reform,” Oyedele said during one of his public engagements. “But that debate must be based on facts, not wrong information.”
From that process came four major laws: the Nigeria Tax Act, 2025; the Nigeria Tax Administration Act, 2025; the Nigeria Revenue Service (Establishment) Act, 2025; and the Joint Revenue Board (Establishment) Act, 2025. Together, these laws form the foundation of a new tax system that government officials say is designed to be simpler, fairer and closer to global standards, while also protecting low-income earners and small businesses.
A system that needed change
Before the reforms, Nigeria’s tax-to-GDP ratio was among the lowest in countries of similar size and development. This meant that, compared to the size of its economy, Nigeria collected very little in taxes. For government, this limited its ability to invest in roads, schools, hospitals and other public services.
Businesses, on the other hand, complained about multiple taxes and levies coming from federal, state and local governments. In many cases, they said they were being charged several times on the same type of income or activity. The rules were often unclear, and dealing with tax offices could be stressful and time-consuming.
Small businesses, which employ millions of Nigerians, were especially affected. Many of them stayed outside the formal system because they felt the cost of registration and compliance was too high for their size. This, in turn, meant the government could not properly track or support them.
Oyedele summed up the problem in one of the committee’s early statements. He said Nigeria’s tax system had “for a long time been a barrier to growth, hurting productivity, discouraging investment and placing a heavy burden on the poor.”
For the committee, the real challenge was not just to increase revenue, but to build a system that people would trust. They wanted a system that citizens and investors could see as fair, clear and predictable.
This thinking shaped how the new laws were designed and how they will be introduced and implemented. While the laws that created new institutions, such as the Nigeria Revenue Service and the Joint Revenue Board, took effect in June 2025, the main tax and administration rules are scheduled to begin on January 1, 2026.
Putting small businesses first
One of the most discussed parts of the reform is the special treatment for small companies. Under the new rules, any business with annual turnover of N100 million or less, and total fixed assets below N250 million, will pay zero percent corporate income tax.
The government says this is meant to protect small businesses and encourage them to register formally. These businesses make up a large part of Nigeria’s economy and provide jobs for millions of people, but many of them struggle to survive because of rising costs.
“This is about recognising the reality on the ground,” said Dr. Wahab Balogun, Managing Director and Chief Executive Officer of Ambosit Capital Managers. “You cannot grow an economy by putting too much pressure on the smallest businesses.”
For larger companies, the laws provide a path for a reduction in the corporate income tax rate from 30 per cent to 25 per cent. This change will depend on a presidential order, based on advice from the National Economic Council.
The message from government is that Nigeria wants to become more attractive to investors, especially in a region where countries are competing with one another by offering lower and more stable tax rates.
Connecting Nigeria to global tax rules
Another key part of the reform is how Nigeria is aligning with international tax standards, especially the global minimum tax rules supported by the Organisation for Economic Co-operation and Development (OECD).
Under the new laws, local companies with revenue below N50 billion are exempt from the top-up tax. For multinational companies, the threshold is set at the equivalent of Euro 750 million in global revenue.
This means Nigeria can take part in global efforts to prevent large companies from shifting profits to low-tax countries, while also protecting local firms from complex and costly international rules.
The reforms also introduce a five percent annual tax credit for investments in sectors that government considers important for growth. These include manufacturing, agriculture, technology and infrastructure. Officials say this is meant to guide private investment into areas that can create jobs and strengthen the economy.
Paying taxes in naira
In a country where the exchange rate has often been unstable, the new laws also deal with how taxes on foreign currency transactions are paid.
Under the reforms, all taxes must be paid in Naira, using the official market exchange rate. This is meant to make it easier for businesses to plan their cash flow and accounting, especially those involved in international trade.
The committee says this rule will also help strengthen the use of the local currency and reduce confusion for both taxpayers and the tax authorities.
Fuel surcharge and public reaction
One of the most controversial parts of the reform has been the five per cent surcharge on fuel. When the news spread, many people believed it was a brand-new tax that would increase transport costs and make inflation worse.
The committee moved quickly to address this concern. It explained that the surcharge already existed in law under the Federal Roads Maintenance Agency Act of 2007. The new Tax Act, it said, only brought the provision into the main tax framework to make it clearer and more transparent.
“The surcharge is not new,” the committee said in a public note. “It has been in the law for years.”
However, the law also states that the charge cannot take effect unless the Minister of Finance issues a specific order, which must be published in the Official Gazette.
Certain products are exempt. These include household kerosene, cooking gas, compressed natural gas and clean or renewable energy products. This is meant to support Nigeria’s plans to move towards cleaner energy sources.
The committee defended the surcharge as a way to provide steady funding for road maintenance. It argued that good roads reduce travel time, lower vehicle repair costs and make it cheaper to move goods across the country.
According to the committee, many countries around the world use similar systems to make sure there is always money available to maintain their road networks.
Relief for aviation industry
The aviation sector has been one of the strongest voices in the tax reform discussions. Airlines in Nigeria operate in a difficult environment, with high fuel costs, foreign exchange challenges and many different charges.
One of their biggest complaints was the 10 per cent withholding tax on aircraft leases. Airlines said this tax made it more expensive to acquire or lease planes, putting them at a disadvantage compared to foreign competitors.
Under the new laws, this withholding tax has been removed. Instead, a new regulatory framework is introduced, which could allow for full exemption or a much lower rate.
Oyedele explained the impact using a simple example. An airline leasing an aircraft for $50 million would previously have to pay $5 million as withholding tax, and that money could not be recovered. Removing this, he said, is a major relief for the industry.
The reforms also change how value-added tax (VAT) applies to airlines. In the past, VAT was suspended on some airline activities, but airlines could not claim back VAT paid on many of their inputs, such as equipment and services.
Under the new system, airlines can claim input VAT on assets, consumables and services. If they end up with more VAT credits than they owe, the law requires the tax authority to refund the excess within 30 days. The refund is backed by a special account, or the airline can choose to use the credit to reduce other tax bills.
There has also been concern about how VAT might affect ticket prices. The committee argued that because airlines can now recover VAT on their inputs, the final impact on ticket prices would be much smaller than people fear.
“Even in the worst case,” the committee said, “the increase would not be more than 7.5 percent.”
Changes to Capital Gains Tax
Another major area of reform is capital gains tax, especially for people who invest in shares and other capital market products.
Previously, a flat rate of 10 per cent applied to gains from selling shares. Under the new laws, this has been replaced with a system that links capital gains to a person’s overall income. The tax rate can now range from zero to 30 per cent, depending on how much the investor earns in total.
For large companies, the top rate is expected to match the planned reduction in corporate income tax.
One important change is that investors can now deduct certain costs before calculating their taxable gain. These include capital losses, brokerage fees and some financing costs. In the past, many investors complained that they were being taxed on their gross gains, not on what they actually earned after expenses.
The law also includes several exemptions. Small investors, pension funds, real estate investment trusts and small companies under the N100 million turnover threshold are not affected by the new capital gains tax rules.
Investors who reinvest their money in Nigerian shares within 12 months can also qualify for exemption. This is meant to encourage long-term investment in the local stock market.
To avoid taxing gains that were made before the new law takes effect, the rules reset the cost of existing investments. The new starting point will be the higher of the original purchase price or the market value as of December 31, 2025.
The committee says these changes are not about raising more money for government, but about making Nigeria’s capital market more competitive and attractive to investors.
Tax identification and bank accounts
Few issues caused as much public worry as the link between tax identification and bank accounts. Messages spread online claiming that bank accounts would be frozen or money would be taken automatically from people who did not have a Tax ID.
The committee responded directly. “Don’t panic,” one of its public notes said. “The Tax ID is for easier administration, not to punish people.”
Under the law, only “taxable persons” are required to get a Tax ID. This includes people and businesses that are involved in trade, business or other income-generating activities.
The requirement for business accounts has actually existed since 2020. What the new law does is to harmonise the system across federal and state governments.
To make things easier, the Executive Chairman of the Nigeria Revenue Service (NRS) Dr. Zacch Adedeji noted that “the law allows individuals to use their National Identification Number (NIN) as their Tax ID. For companies, their Corporate Affairs Commission registration number can serve the same purpose.” This is meant to reduce paperwork and duplication.
For Nigerians living abroad, the law provides a simplified process using the NIN for banking and investment activities in Nigeria.
Sanctions will apply to taxable persons who fail to register by January 1, 2026. These may include restrictions on operating certain business or investment accounts. However, people who are not taxable are not required to get a Tax ID.
Diaspora income and double taxation
Another area of concern was whether Nigerians living abroad would be taxed on money they earn overseas or on remittances they send home.
The law is clear on this point. Simply bringing money into Nigeria does not make it taxable. Tax only applies to income, profits or gains that come from activities in Nigeria.
The new rules also include provisions to protect people from being taxed twice on the same income. This is especially important for Nigerians who live and work in other countries but still have business or investment ties to Nigeria.
The government hopes this will encourage more investment and remittances from the diaspora.
Fighting misinformation
Throughout the reform process, the committee says it has had to deal with a lot of wrong or misleading information.
Oyedele shared the story of an investor who refused to take part in a rights issue because he believed he would have to pay a 30 per cent capital gains tax. After checking the new law, he found out that he would actually be exempt.
“Good news does not spread as fast as bad news,” Oyedele said. He warned that low awareness about tax rules makes people more likely to believe alarming claims.
He also rejected reports that foreign investors were unhappy with the reform process. According to him, a call with 281 participants from more than 10 countries showed strong support for the engagement process.
“Many of them said they wished we had more time,” he said. “That is very different from frustration.”
The road ahead
The success of the reforms will depend on how well the new Nigeria Revenue Service and the Joint Revenue Board can work together across federal and state levels. They will need to process refunds quickly, protect taxpayer data, and enforce the rules in a fair and respectful way.
For businesses, the coming months will be a time to study the new rules and adjust their accounting and tax planning systems. For individuals, especially those with low incomes, the government’s promise is that they will pay less or nothing at all, while essential items like food, education and healthcare remain free from VAT.
The larger goal is to build a system that people trust. If citizens believe the rules are fair and clear, more of them may be willing to register their businesses and pay taxes. This would widen the tax base and give government more stable resources to invest in public services, without having to introduce sudden or extra charges.
As the committee’s public campaign often says, the key question for every claim about the new tax laws is simple: “Where is it in the law?”
For Nigeria’s tax reform, the real answer will not only be found in the pages of the Official Gazette, but in how the new system affects the daily lives of business owners, workers, investors and ordinary citizens. It will be measured by whether people feel that what they pay to the state is matched by what they receive in return.
