Date: 26 June 2025
Location: Presidential Villa, Abuja
Event: President Bola Tinubu signs four groundbreaking tax reform bills into law.
1. What Just Happened?
On Thursday, President Bola Tinubu formally signed into law four major tax reform bills:
Nigeria Tax Bill
Nigeria Tax Administration Bill
Nigeria Revenue Service (Establishment) Bill
Joint Revenue Board (Establishment) Bill
The ceremony, held at the Presidential Villa, was attended by top officials—including the Senate President, Speaker, Finance Committee chairs, and state governors—highlighting its significance .
2. Key Provisions in the Reforms
Simplified, Fairer Tax System
Merged legislation: Consolidates scattered tax laws into a unified, easy-to-navigate framework to reduce compliance hurdles
VAT remains at 7.5%: The previous attempt to raise VAT was dropped. Instead, the distribution formula was revised to gradually favor economic contribution—with a new split: 30% to contributors, 50% equally, and 20% based on population.
Small business relief: Enterprises with ≤₦50 million annual turnover and ≤₦250 million in assets get corporate income tax exemptions.
Structural & Administrative Overhaul
New national revenue authority: Replaces FIRS with a stronger, more autonomous Nigeria Revenue Service (NRS) tasked with collecting both tax and non-tax revenues.
Coordinated tax governance: Establishes a Joint Revenue Board, a Tax Appeal Tribunal, and Office of the Tax Ombudsman to strengthen taxpayer protections.
VAT revenue now tied to point of consumption: Strengthens fairness in how revenue is shared across communities.
3. Why It Matters
a) Modernisation & Investment Appeal
Tinubu stated the reforms aim to “create a modern, transparent, and efficient tax system,” boosting ease of doing business and attracting foreign and local investors.
b) Economic Relief for Citizens
According to Dr. Taiwo Oyedele, workers earning up to ₦1.3 million annually—and 35% of employees—will get PAYE exemptions; VAT exemptions on essentials like food, healthcare, and education will ease the cost of living.
c) Smarter Revenue Sharing
The VAT allocation formula now incentivizes states to grow their revenue while maintaining a fairness component. Northern states had initially resisted this, fearing it favored prosperous southern states.
d) Institutional & Administrative Reforms
The new NRS and oversight bodies promise improved efficiency, autonomy, and taxpayer trust. The addition of digitalizers, enhanced transparency, and judiciary validation for asset seizure are part of broader modernization efforts.
4. Stakeholder Reactions
Tinubu called it a major leap in economic reform—emphasizing fairness and simplified compliance.
Financial Minister Wale Edun echoed that these laws will improve system efficiency and nearly double the tax-to-GDP ratio.
Zacch Adedeji (FIRS) Endorsed the move, citing improved clarity and trust in the system.
NLC & Northern Leadership: Voiced concerns over potential loss of state revenue and called for revisions to shared VAT components
5. What’s Next?
Implementation begins Jan 1, 2026: Provides time for stakeholders to adapt
Harmonisation of versions: National Assembly will finish aligning House and Senate versions before full rollout.
Capacity-building time: Agencies must prepare infrastructure and personnel for a smooth transition.
Closing revenue gaps: Goal is to move away from Nigeria’s low ~10.8% tax-to-GDP ratio.
conclusion
These tax reforms mark a landmark moment—they simplify a fragmented system, shield vulnerable populations, empower small businesses, and set the stage for efficient, transparent revenue collection. However, regional concerns around revenue sharing and implementation logistics loom large. Success will hinge on strong institutional capacity, stakeholder engagement, and political will.
Stay Tuned:
Detailed breakdown of how NRS will differ from FIRS
Impact metrics on small businesses and budget revenue
Reactions from state governments and civil society
