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Nigeria New Tax Laws: What You Need to Know

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President Bola Tinubu on Thursday signed four new tax laws aimed at modernising and streamlining the country’s tax system.

In the new tax law, the Value Added Tax rate remains at 7.5 per cent despite initial proposals to increase to 12.5 per cent, but its scope is expanded.Essential items—such as food, education, healthcare, public transport, residential rent, and exports—are zero-rated to ease inflationary pressure.

For revenue allocation is restructured: now 30 per cent of VAT proceeds are distributed based on consumption (rather than contribution), 50 per cent equally among states, and 20 per cent to population-based allocation.

With the latest development, it is expected that state revenue streams will increase, and it will also discourage tax evasion.

Overview of the four new lawsNigeria Tax Act:

Consolidates various tax rules into a single, simplified code, eliminating over 50 small, overlapping taxes. This reduces complexity and duplication, making it easier for businesses to comply.

Tax Administration Act:

Establishes uniform rules for tax collection across federal, state, and local governments, ensuring consistency and reducing administrative conflicts.

Nigeria Revenue Service Act:

Replaces the Federal Inland Revenue Service with the independent Nigeria Revenue Service, aiming for greater efficiency and autonomy in tax administration.

Joint Revenue Board Act:

Enhances coordination between different government levels and introduces a Tax Ombudsman and Tax Appeal Tribunal to handle disputes fairly.

Key objectives of the new tax rules

Simplify Tax System:

Reduces bureaucratic hurdles and overlapping taxes to make compliance easier, especially for small businesses and informal traders.

Increase Revenue Efficiency:

Aims to boost Nigeria’s tax-to-GDP ratio from 10% (below the African average of 16–18%) to 18 per cent by 2026 without raising taxes on essential goods.

Reduce Financial Burden:

Provides relief for low-income households and small businesses while ensuring high-income earners and luxury consumers contribute more.

Fund Public Services: Increased revenue will support infrastructure, healthcare, and education, reducing reliance on borrowing.Who benefits and how

Low-Income Households:

Individuals earning up to ₦1 million ($650) annually receive a ₦200,000 rent relief, reducing taxable income to ₦800,000, exempting them from income tax.

VAT exemptions on essential goods and services (food, healthcare, education, rent, power, baby products) lower living costs.

Small businesses:

Businesses with an annual turnover below ₦50 million ($32,400) are exempt from company income tax.

Simplified tax filing without requiring audited accounts reduces compliance costs.

Large businesses:

Corporate tax rates drop from 30 per cent to 27.5 per cent in 2025 and 25 per cent thereafter.Tax credits for VAT paid on expenses and assets allow businesses to recover the 7.5 per cent VAT.

Charitable, educational, and religious organisations:

Tax incentives for non-commercial earnings, encouraging community-focused activities.

Impact on different groups

Low-Income Earners:

Benefit most from income tax exemptions and lower costs for essentials, increasing disposable income.

Small Businesses and informal traders:

Simplified rules and tax exemptions encourage compliance and reduce financial strain, potentially formalising more businesses.

High-income earners and luxury consumers face higher VAT on luxury goods and premium services, plus capital gains tax on large share sales.

Government: Expects increased revenue for public services without overburdening vulnerable citizens.

Why reforms were needed:

Nigeria’s tax system was outdated, inefficient, and disproportionately harsh on low-income groups.

The low tax-to-GDP ratio (10%) limited funding for critical services like healthcare and infrastructure.

Overlapping taxes and complex rules deterred compliance, especially among small businesses and informal traders.

Public and expert reactionsPositive sentiment:

Small business owners welcome tax exemptions but seek clarity on enforcement to avoid unexpected levies.

Low-income earners appreciate relief on essentials but remain cautious about implementation.

Taiwo Oyedele, head of the Presidential Fiscal Policy and Tax Reform Committee, claims 90% public support, emphasising that success depends on awareness and trust.

The reforms align with Tinubu’s administration’s goal to reduce economic inequality and boost fiscal capacity without overburdening citizens.

By encouraging voluntary compliance and reducing reliance on loans, Nigeria aims to strengthen its economy and fund development projects.

These reforms mark a significant step toward a fairer, more efficient tax system, with a focus on supporting vulnerable groups while fostering economic growth.

However, their success hinges on transparent enforcement and public trust.

For further details, you can refer to official statements from the Nigerian government or credible news sources covering the reforms.

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Atiku Backs Suspension of new tax framework , following unconstitutional forgery

This constitutional violation exposes a troubling reality: a government obsessed with imposing ever-increasing tax burdens on impoverished Nigerians rather than creating conditions for prosperity.

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Atiku Abubakar, ex- Vice President of Nigeria (1999-2007) has strengthened the public calls for the suspension of the Federal Government’s new tax laws following the discovery of illegal and unauthorized alterations made to document after passage by the National Assembly.

Atiku, in a statement he signed personally on Tuesday, asserted “What the National Assembly did not pass cannot become law.”

Atiku described the forgery of the tax law as “a brazen act of treason against the Nigerian people and a direct assault on our constitutional democracy.”

The statement reads: “This draconian overreach by the executive branch undermines the foundational principle of legislative supremacy in the making of laws.

It reveals a government more interested in extracting wealth from struggling citizens than empowering them to prosper.

The Unconstitutional Alterations

The following substantive changes were allegedly illegally inserted into the tax bills after parliamentary approval, in clear violation of Sections 4 and 58 of the 1999 Constitution:

1. New Coercive Powers Without Legislative Consent

*Arrest powers granted to tax authorities

*Property seizure and garnishment without court orders

*Enforcement sales conducted without judicial oversightThese provisions transform tax collectors into quasi-law enforcement agencies, stripping Nigerians of due process protections that the National Assembly deliberately included.

2. Increased Financial Burdens on Citizens*Mandatory 20% security deposit before appealing tax assessments*Compound interest on tax debts*Quart

erly reporting requirements with lowered thresholds

*Forced USD computation for petroleum operations

These changes erect barriers that prevent ordinary Nigerians from challenging unjust assessments while increasing compliance costs for businesses already struggling in a difficult economy.

3. Removal of Accountability Mechanisms

*Deletion of quarterly and annual reporting obligations to the National Assembly

*Elimination of strategic planning submission requirements

*Removal of ministerial supervisory provisions

By stripping away oversight mechanisms, the government has insulated itself from accountability while expanding its powers—a hallmark of authoritarian governance.

A Government Against Its People

This constitutional violation exposes a troubling reality: a government obsessed with imposing ever-increasing tax burdens on impoverished Nigerians rather than creating conditions for prosperity.

Instead of investing in infrastructure, education, healthcare, and economic empowerment that would expand the tax base organically, this administration chooses the path of aggressive extraction from an already struggling populace.

Nigeria’s poverty rate remains alarmingly high, unemployment continues to devastate families, and inflation erodes purchasing power daily.

Yet rather than supporting citizens to become more productive, thereby generating sustainable tax revenues, the government employs draconian measures to squeeze resources from people who have little left to survive.

True economic growth comes from empowering citizens, not impoverishing them further through punitive taxation and erosion of legal protections.

A thriving economy with prosperous citizens naturally generates robust tax revenues. But this requires vision, investment, and patience, qualities evidently lacking in an administration that resorts to constitutional manipulation to achieve short-term fiscal goals.

I hereby call upon:1. The Executive to immediately suspend the implementation of the tax law effective January 1, 2026 to give room for a proper investigation.

2. The National Assembly to immediately rectify these illegal alterations through proper legislative processes and hold accountable those responsible for this constitutional breach.

3. The Judiciary to strike down these unconstitutional provisions and reaffirm the sanctity of the legislative process.

4. Civil Society and all Nigerians to reject this assault on democratic principles and demand governance that serves the people rather than exploiting them.

5. The Government to abandon this path of extraction and oppression, and instead focus on policies that enable Nigerian citizens and businesses to thrive.

6. The EFCC to immediately investigate and prosecute those found culpable in the illegal alteration of our laws to extort and defraud the Nigerian people.

What the National Assembly did not pass cannot become law.

This fundamental principle must be defended, or we risk descending into arbitrary rule where constitutional safeguards mean nothing.

The Nigerian people deserve better than a government that circumvents democracy to impose hardship.

We demand accountability, constitutional compliance, and economic policies that build prosperity rather than deepen poverty.”

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FIRS says NIN to serve as Tax ID for individuals

The new tax law is scheduled to come into force in January 2026 and mandates the use of a Tax ID for certain financial and economic transactions, including banking-related activities.

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The Federal Inland Revenue Service (FIRS) has announced that the National Identification Number (NIN) issued by the National Identity Management Commission (NIMC) will now automatically serve as the Tax Identification Number (Tax ID) for individual Nigerians under the country’s new tax regime.

FIRS also said that registered businesses will also no longer need a separate Tax Identification Number, as their Corporate Affairs Commission (CAC) registration (RC) number will now function as their Tax ID.

The Service made the disclosure on its official X handle on Monday, ahead of the passage of the Nigeria Tax Administration Act (NTAA), one of the new tax laws introduced as part of the Federal Government’s broader fiscal and tax reform agenda .

The new tax law is scheduled to come into force in January 2026 and mandates the use of a Tax ID for certain financial and economic transactions, including banking-related activities.

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Tanker crushes Akpabio’s dispatch rider to death

We went to Oyo State for the installation of our colleague, but the vehicles that came to pick me up at the Ibadan airport, unfortunately, my dispatch rider was run over by a tanker driver, and his head was shattered.

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Ibrahim Hussaini, a dispatch rider attached to the convoy of Godswill Akpabio, the Senate President, has been killed after a petrol tanker rammed into the motorcade.

Although the Senate President did not state the precise location of the crash, he said that it happened in Ibadan, Oyo State, shortly after members of his convoy picked him up from the Ibadan Airport.

Akpabio announced the death during the plenary on Tuesday; he extended condolences to the family of the deceased.

Dispatch riders, who are police officers, form part of the security detail of top government officials and typically escort convoys on motorcycles.

Dispatch riders, who are police officers, form part of the security detail of top government officials and typically escort convoys on motorcycles.

“We went to Oyo State for the installation of our colleague, but the vehicles that came to pick me up at the Ibadan airport, unfortunately, my dispatch rider was run over by a tanker driver, and his head was shattered.

“We just buried him 15 minutes ago in Kogi State. He left two wives and four children,” the Senate President told lawmakers

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