President Bola Tinubu recently signed into law four sweeping tax reform bills aiming to modernize and simplify Nigeria’s tax system. The laws consolidate existing tax codes, streamline administration, and establish new institutions like the Nigeria Revenue Service, a Joint Revenue Board, and a Tax Ombudsman—all designed to enhance transparency and compliance .
Under these reforms:
The VAT rate remains at 7.5%, with plans to ensure essential goods and services—like food, education, and healthcare—stay exempt. The system now allows businesses to recover VAT on input costs through filings .
Only individuals with income below the minimum wage are fully exempted from personal income tax. Those earning above ₦50 million will face higher tax brackets, while middle-income earners benefit from a more progressive tax scale .
Small businesses with turnover under ₦50 million are now excluded from income tax. The threshold for small companies has increased, and a flat development levy of 4% has replaced the old tertiary education levy. However, corporations earning little to no profit still face a minimum tax unless they meet certain revenue thresholds .
A top-up tax ensures that large corporations and multinational groups pay a minimum of 15% effective tax, aligning Nigeria with international standards like the OECD’s Pillar Two initiative .
Capital gains tax has been brought into line with corporate income tax rates, replacing the old 10% flat CGT .
The reforms also introduce VAT fiscalisation (e-invoicing), stricter penalties for non-compliance, tighter conditions for incentives (especially in export zones), and expanded technology use with tools like E-invoicing and a national single window system .
According to government advisors, these changes aim to curb inflation—lowering it toward a 15% target—and shift the VAT burden away from everyday essentials. Critics caution against potential effects on consumption and economic growth .
Overall, the new tax regime strives to simplify compliance, encourage investment, protect low-income households, and broaden Nigeria’s fiscal base. Businesses and individuals are encouraged to review how the changes affect them and prepare to adapt as the laws come into effect.
