Nigeria’s New Tax Reform Acts: A Step Towards Economic Growth

BY Victoria otonyemeba
September 12, 2025
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President Bola Ahmed Tinubu has signed into law four transformative tax reform bills aimed at overhauling Nigeria’s complex and inefficient tax regime.

The new statutes, which include the Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service Act, and Joint Revenue Board Act, are expected to take effect on January 1, 2026.

The tax reforms are designed to modernize tax collection processes, enhance compliance, optimize revenue, and promote greater accountability within Nigeria’s tax system.

A key aspect of the reforms is the introduction of a uniform procedure for consistent and efficient administration of tax laws, facilitating tax compliance by taxpayers and optimizing tax revenue.

One of the significant changes is the revision of the Value Added Tax revenue-sharing formula. According to the new formula, states and local governments will receive the bulk of the VAT revenue, with 55% and 35% allocated to states and local governments, respectively, while the federal government will receive 10%.

The reforms also aim to reduce the tax burden on small businesses and low-income earners. Individuals earning N800,000 or less annually will be exempt from paying personal income tax, and small companies with an annual turnover not exceeding N100 million will be exempt from Companies Income Tax, Capital Gains Tax, and development levy.

The Nigeria Tax Administration Act introduces stricter compliance measures, including mandatory deployment of an Electronic Fiscal System for e-invoicing and e-filing, and administrative penalties for non-filing, non-remittance, and obstruction of tax officials.

The Act also creates a central Unified Digital Tax Portal to facilitate tax compliance and optimize revenue collection.

The reforms are expected to promote economic growth, increase revenue generation, and improve the business environment.

However, their success will depend on the fidelity of implementation, judicial clarity on constitutional questions, and robust stakeholder engagement.