Nigeria will officially enter a new tax era on January 1, 2026, following the signing into law of four major reform bills by President Bola Ahmed Tinubu. These include the Nigeria Tax Act, the Tax Administration Act, the Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Act. Together, they reshape the country’s fiscal architecture in the most significant overhaul in decades.
At the heart of the reform is the replacement of the Federal Inland Revenue Service with a new Nigeria Revenue Service, which will serve as the single authority for collecting both tax and non-tax revenues. This consolidation is expected to simplify the process, strengthen efficiency, and close long-standing loopholes that have weakened Nigeria’s revenue base. The creation of a new Joint Revenue Board further signals a commitment to transparent and equitable distribution of revenues between the federal, state, and local governments.
For individual taxpayers, the law introduces substantial relief. Anyone earning ₦800,000 or less annually will no longer pay personal income tax. In fact, over one-third of workers across both public and private sectors are expected to be fully exempt from PAYE obligations. Minimum wage earners are also shielded from tax, creating a protective floor for low-income households. In addition, essential goods and services—covering food, healthcare, education, housing, transportation, and accommodation—have been removed entirely from VAT. Since these categories represent the bulk of household spending, the exemption is designed to ease cost-of-living pressures and provide a direct cushion for families struggling with inflation.
Small and medium-sized businesses form another focus of the reform. Enterprises with an annual turnover below ₦100 million and fixed assets valued under ₦250 million will be exempt not just from corporate income tax but also from Capital Gains Tax and the new Development Levy. By contrast, larger companies will see the corporate income tax rate gradually reduced from 30 percent to 25 percent beginning in 2026, with a transitional rate of 27.5 percent applied in 2025. The three separate levies that previously weighed on firms the Tertiary Education Tax, the NASENI Levy, and the IT Tax have now been merged into a single Development Levy, starting at four percent before tapering down to two percent by 2030. This measure reduces duplication and streamlines corporate tax obligations.
The government has deliberately chosen a six-month transition window before implementation to prepare stakeholders, align tax administration with budgeting cycles, and upgrade the systems required for a smooth rollout. Zacch Adedeji, who now heads the Nigeria Revenue Service, has emphasized that the period will be used for extensive public sensitization and digital integration, underscoring the administration’s pledge to ensure clarity and predictability in the tax environment.
The reforms are being welcomed with cautious optimism. Businesses see the simplification of levies and the reduction in corporate tax rates as an opportunity to plan and invest with greater certainty. Families are encouraged by the VAT exemptions and the removal of tax burdens on low-income earners, while policymakers view the unified revenue framework as a step toward greater fiscal transparency. However, questions remain around implementation. Critics caution that Nigeria’s large informal economy and entrenched inefficiencies could undermine the reforms if enforcement is weak. There is also debate around how VAT revenues will be shared among states, with concerns that regional disparities may persist unless carefully managed.
Nonetheless, what is clear is that Nigeria is on the threshold of a landmark tax transition. For individuals, this is the time to reassess personal financial planning under the new exemptions. For small businesses, the reforms create room to grow without the weight of excessive taxation. For large corporations and investors, the streamlined system offers a more predictable climate for long-term planning. Beginning January 1, 2026, Nigeria’s tax environment will no longer be what it once was; it will be leaner, more transparent, and structured to balance relief with revenue stability.
