President Bola Tinubu has signed on June 26 four pivotal finance bills into law, signalling a landmark reform of Nigeria’s tax regime.
The newly enacted laws—the Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service Act, and Joint Revenue Board Act—aim to simplify tax processes, reduce redundancies, and improve coordination among federal, state, and local governments. According to the presidency, these reforms are designed to ease the tax burden on low-income earners and small businesses, while modernising revenue collection to improve government income without increasing taxes on essential goods.
Among the most impactful measures is the elimination of over 50 small taxes and the introduction of generous reliefs for individuals earning less than 1 million naira annually. Such earners will now be exempt from income tax, and VAT will no longer be applied to essential services like food, rent, healthcare, and electricity. Small businesses with turnover under 50 million naira will no longer pay company income tax and will benefit from simplified reporting requirements. Larger corporations, meanwhile, are set to see their tax rates reduced over the next two years and will be able to reclaim VAT on eligible expenses.
The reforms are aimed at correcting Nigeria’s historically low tax-to-GDP ratio—currently around 10%—with the government targeting an 18% ratio by 2026. This would bring Nigeria closer to the African average and allow greater investment in infrastructure, healthcare, and education, without placing additional pressure on struggling citizens. Officials say the changes promote fairness, encourage formalisation of informal businesses, and shift the tax focus away from essential goods towards luxury items and high-net-worth individuals.
Public response to the reforms has been cautiously optimistic. While many small business owners welcome the exemptions, there is concern about inconsistent enforcement and the risk of being subjected to arbitrary levies. Citizens also question whether reduced VAT on essentials will lead to noticeable price drops, given past experiences of poor implementation. Economists warn that unless the conduct of tax authorities changes, the intended relief may not materialise, especially if businesses are subjected to aggressive reassessments or hidden charges.
Despite scepticism in some quarters, officials maintain the reforms are a step in the right direction. Taiwo Oyedele, head of the Presidential Fiscal Policy and Tax Reform Committee, noted strong public support but emphasised the importance of building trust and raising awareness. For now, reactions from opposition parties and trade unions remain relatively muted, as Nigerians wait to see whether the bold promises of tax justice and economic relief will translate into tangible outcomes.