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President Bola Tinubu signed four tax reform bills into law on Thursday, indicating Nigeria's commitment to modern economic development and attracting international investments.
As a result of Tinubu's approval, key agencies like the Nigeria Customs Service and various federal ministries may forfeit their tax collection responsibilities.
This move positions the Nigeria Revenue Service as the exclusive authority for federally imposed taxes, likely prompting significant restructuring within Nigeria's revenue system.
“We have paved the way for new economic and business opportunities. We are demonstrating that Nigeria is genuinely ready and open for business. It's straightforward to enter and exit,” stated Tinubu during the signing event at the State House in Abuja.
He recognized the intricacies of tax reforms but commended stakeholders for their leadership and courage throughout the process.
He expressed that this signing represents a pivotal change in the country’s fiscal trajectory: “We are in transition. We have altered the rules and addressed previous misconceptions. Discussions surrounding our tax-to-GDP ratios and other formulas will become outdated,” he remarked.
This event follows nearly two years after President Tinubu established a Presidential Committee on Fiscal Policy and Tax Reforms on July 7, 2023, appointing Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers, as chairman. Hours after this, he signed four Executive Orders that suspended a five percent excise tax on telecommunication services and halted increased excise duties on locally manufactured vehicles.
Inaugurated on August 8, 2023, the committee comprises experts from both sectors and was charged with reforming tax laws, designing fiscal policy, coordinating taxes, and refining revenue administration.
On October 24, 2023, Oyedele submitted a quick-wins report to the President, suggesting the consolidation of over 200 taxes levied on Nigerian businesses into 10 categories. Following extensive stakeholder engagements, the tax bills were then brought to the National Assembly in late 2024. However, they encountered resistance among some lawmakers and state governors who contested their passage.
The Comptroller-General of the Nigeria Customs Service, Bashir Adeniyi, previously expressed concerns that the proposed bills conflicted with the agency’s jurisdiction and threatened its existence.
The bills sparked intense debates at the NASS, especially regarding the revenue-sharing structure, which faced opposition from northern governors who warned that shifting to derivation-based allocations, particularly concerning VAT, could disadvantage northern states with weaker consumption bases. After lengthy discussions, the VAT rate was maintained at 7.5%, while new exemptions were introduced to alleviate personal income tax burdens for minimum wage earners.
By May 2025, the harmonized versions of the bills received approval from the National Assembly, garnering widespread support influenced by economic stakeholders and international observers who welcomed the reforms' anticipated clarity and efficacy.
The four bills are: the Nigeria Tax Bill (Fair Taxation), Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. According to the President, these reforms will unify the fragmented tax system, eliminate redundant practices, reduce bureaucracy, restore investor confidence, and enhance transparency and cooperation at all levels.
Tinubu noted that Nigeria’s taxing structure has long imposed undue burdens on vulnerable populations while fostering inefficiency. He emphasized that this signing represents the start of Nigeria's tax transformation.
Meanwhile, Zacch Adedeji, the Executive Chairman of the National Revenue Service (previously the Federal Inland Revenue Service), announced that the new tax laws will take effect on January 1, 2026.
He explained that this timeline will allow for adequate planning, education, and synchronization with the fiscal calendar, stating, “In accordance with global best practices, changes of this nature require adequate time for all stakeholders, operators, and regulators to adapt.”
Adedeji also highlighted that the reforms should launch at the beginning of the year, saying, “Effective from the first of January 2026,” which would provide time for education, planning, and alignment with the government’s budgeting processes.
The committee chairman, Taiwo Oyedele, characterized the new tax laws as “pro-poor,” asserting they will alleviate burdens on low-income earners, small business owners, and everyday Nigerians. He mentioned that “over a third of workers in both private and public sectors will now be exempt from PAYE. They will not pay personal income tax.”
He added that small businesses, particularly those classified as micro or nano, will no longer face obligations to pay corporate income tax, charge VAT, or withhold personal income tax for their employees.
Oyedele pointed out that these reforms aim to leave more disposable income for citizens while introducing a new zero-rate VAT scheme on essential goods.
He explained that VAT on food, education, and health care is completely exempt, which should lead to lower prices for those items.
He further clarified that VAT exemptions would also apply to transportation, accommodation, and housing—areas where households primarily allocate their spending.
During an appearance on Channels Television's Politics Today, Oyedele noted that the existing revenue system was opaque, emphasizing that the new system, managed by the Nigerian Revenue Service, will require the government to operate with greater transparency. He stressed that the new tax laws mandate the government to provide timely and accessible reports to the public.
The transformation from FIRS to NRS (Nigerian Revenue Service) aims to foster collaboration with subnational governments. The NRS is set to implement a digitized system that will gather data such as National Identity Numbers, phone numbers, and banking details to prevent tax evasion by high-income individuals.
Oyedele mentioned that the reform bills were crafted with three main goals in mind: to be people-focused, efficiency-driven, and growth-oriented. He elaborated on potential revenue sources, stating that closing the estimated 70 percent tax gap could significantly increase collection rates.
He stated, “We anticipate raising funds through eliminating tax evasion and addressing numerous wasteful incentives that distort our economy. With these measures, we aim to generate resources without imposing additional taxes on the populace.”
Chairman of the Senate Finance Committee, Senator Sani Musa, affirmed that the new tax reform laws express the true aspirations of Nigerians, the result of comprehensive consultations with stakeholders, including those who initially opposed the reforms.
He acknowledged previous backlash but noted that the National Assembly managed the legislative process with care.
Musa asserted that consultations led to bills reflecting Nigerians' aspirations, particularly in favor of economically vulnerable groups. He also praised the bills for harmonizing Nigeria's disjointed tax system, which extends to crucial sectors like oil and gas and Export Processing Zones.
Hon. James Faleke, Chairman of the House Finance Committee, described the passage of the bills as an achievement made possible through national solidarity.
He praised the collaborative efforts of lawmakers and governors while reinforcing that the reforms do not create new tax obligations, but enhance collection efficiency and eliminate financial leakages.
The Nigeria Employers’ Consultative Association welcomed President Tinubu’s approval of the tax reform bills as a vital step in addressing over a decade of burdensome multiple taxation on businesses.
During the 4th Employers Summit in Abuja, NECA's Director-General Adewale-Smatt Oyerinde regarded the new laws, which standardize taxes across various government levels, as a long-awaited relief for the Organized Private Sector.
“We are grateful this has happened, as we've advocated for it for years,” Oyerinde conveyed. While celebrating this milestone, he stressed that the challenge now lies in effective execution, stating, “Implementation will present its own challenges.”
He pointed out that the issue extends beyond tax rates and includes an inefficient collection process that has hindered business growth. “Tax collection efficiency has been a longstanding concern for all rational stakeholders.”
He affirmed NECA's commitment to collaborating with the Federal Inland Revenue Service moving forward to ensure effective implementation of these reforms.
Following the signing of the tax reforms by President Bola Tinubu, the Special Adviser on Energy, Olu Verheijen, announced that the new laws encapsulate four critical executive orders aimed at enhancing investment in Nigeria's oil, gas, and clean energy sectors.
She indicated that these reforms have already resulted in over $6 billion in fresh investments in the oil and gas industry.
Verheijen described the signing as a “historic moment” showcasing the administration's dedication to driving reforms within the energy sector through long-term policy clarity.
The legislation codifies key executive orders, including a framework for fiscal incentives and VAT exemptions for clean energy products, along with measures to decrease operational costs in the upstream oil sector.
She commended this development as a strategic victory for both public and private sectors, asserting that the energy industry now has a legal foundation guaranteeing investors stability despite political changes.
