NIGERIA’S TAX SYSTEM GETS A MAJOR SHAKE-UP AS PRESIDENT TINUBU SIGNS NEW LAWS
In a bold move to reshape Nigeria’s economic future, President Bola Ahmed Tinubu has signed four sweeping tax reform bills into law. These bills are designed to overhaul the country’s complex and outdated tax framework, simplify compliance, and ensure a fairer, more transparent revenue system that works for everyone: from small business owners to multinationals, from market traders to remote workers.
The signing ceremony, held at the Presidential Villa on the 26th of June, 2025, in Abuja, brought together high-ranking government officials, including members of the National Assembly, state governors, and federal economic leadership. This united front sends a strong message: Nigeria is ready to modernize how it manages money and serves its people.
These laws take effect from January 1, 2026.
But what do these laws really mean for you? First, a breakdown of what was signed into law.
A QUICK BREAKDOWN OF THE FOUR TAX BILLS
- The Nigeria Tax Bill (Ease of Doing Business)
This consolidates all fragmented and conflicting tax laws across the country into one clean, easy-to-understand framework. No more guessing or conflicting rules. It is now easier for businesses and individuals to know what they owe and when. - The Nigeria Tax Administration Bill
This bill introduces a standardized process for tax collection across all levels of government: federal, state, and local. Everyone plays by the same rules, no matter where they live or do business. - The Nigeria Revenue Service (Establishment) Bill
This bill transforms the former FIRS into the Nigeria Revenue Service (NRS), giving it more autonomy, stronger oversight, and a broader mandate that includes collecting non-tax revenue. It brings accountability and technology-driven systems into tax collection. - The Joint Revenue Board (Establishment) Bill
This bill establishes a centralized board to harmonize revenue collection and reduce overlap and duplication. It also introduces a Tax Appeal Tribunal and a Tax Ombudsman, giving taxpayers a real platform to be heard.
WHAT THIS MEANS FOR YOU, THE NIGERIAN CITIZEN
- Less Stress, More Clarity
Before now, the Nigerian tax system was a jungle. Different taxes from different agencies, many of them duplicated, left individuals and businesses confused and frustrated. With these new reforms, you’ll now deal with a single, streamlined structure that makes it easier to understand your obligations.
Example: A hairdresser in Port Harcourt no longer needs to worry about paying separate levies for signage, shop operation, and business location. Now, one clear tax replaces several confusing ones.
- Major Tax Relief for Small Businesses
The reforms are designed to protect low-income earners. With the introduction of tax exemptions for people earning below a certain threshold, many Nigerians, especially those earning minimum wage, will no longer have to pay personal income tax.
Example: A POS agent or bukka owner running a ₦45 million-a-year business can now reinvest profits instead of paying corporate tax.
If you earn ₦70,000 per month (₦840,000/year), you might not pay any personal income tax at all. That means more money in your pocket for daily needs like food, transport, and rent.
- Bigger Paycheck for Salary Earners
Personal income tax (PAYE) thresholds have increased. If you earn ₦783,000/month or less (₦1 million/year), you will pay no PAYE tax. If you earn up to ₦1.7 million/month, you will now enjoy lower tax rates thanks to new relief allowances.
Example: A school teacher or bank officer will see a little extra in their take-home pay, money that could go to savings, food, or transport.
- Dignity in Transition: Tax-Free Severance
If you lose your job or retire, the first ₦50 million of your severance package is now 100% tax-free. In difficult times, this gives people dignity and financial stability.
- VAT Now Excludes Essentials
Under the new reforms, VAT will no longer apply to key household needs. Items like basic foodstuffs, baby products, electricity, hospital bills, rent, and school fees will now be VAT-free.
Example: Grocery shopping for your family, paying school fees, or visiting a clinic will no longer carry VAT, a relief for millions of households.
- Remote Workers and Digital Nomads, Take Note
If you work for an international company or get paid in dollars/euros via platforms like Payoneer, Wise, or Barter, you now have to register with your state tax authority, declare your income in naira, and pay appropriate tax like everyone else.
Example: A remote software developer in Lagos earning $2,000/month from a UK firm must now register and pay state tax. And yes, if your account is linked to your BVN, it is traceable.
Heads-up: Thanks to international tax agreements, even your foreign employer might report your earnings.
- Less Harassment, More Rights
One of the most exciting parts of the reform is the creation of the Tax Appeal Tribunal and Tax Ombudsman Office. These bodies will allow you to dispute unfair treatment and resolve issues quickly and fairly. Example: If you’re wrongly taxed or feel harassed by tax agents, you can file a complaint and have it resolved without fear or unnecessary delay.
Example: If your local tax agent tries to extort you, you can escalate to the tribunal and get justice.
- States Now Earn from Local Spending
States Will Earn More from What Happens Within Their Borders Under the new VAT (Value Added Tax) system, states will now earn more revenue based on actual economic activity happening within their boundaries. This promotes healthy competition and encourages states to grow their economies.
Example: If more people are shopping, dining out, or using paid services in your state, that money won’t just go to the federal government, it’ll stay within your state and fund local development.
9.Stronger Public Services
When taxes are collected efficiently and transparently, government can fund public services like roads, hospitals, and schools better. The aim is to move Nigeria away from heavy borrowing and towards internally generated revenue that can be used to build real infrastructure. Example: You shouldn’t have to worry about potholes damaging your car or health centres running out of drugs if government revenue improves, because funds will be available and traceable.
WE’RE ALL IN THIS TOGETHER
These reforms will not solve everything overnight, but they lay a strong foundation. Government has shown it is willing to change. Now it is on us too: to pay fair taxes, demand accountability, and play our part in rebuilding Nigeria.
President Tinubu’s tax reforms are not just policy changes; they are people-focused. They put money back in the pockets of ordinary Nigerians, reduce stress for businesses, and increase fairness in how taxes are collected and spent.
Change is here. Let’s make it work for everyone.
SOURCES: Nariametrics, Businessday, istock images, shutterstock images, Punch newspaper, Premium Times, Leadership News, Vanguard News, Daily Times Nigeria, Linda Ikeji’s Blog.
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