As Nigeria undergoes critical economic reform, President Bola Ahmed Tinubu’s administration is advancing one of its boldest initiatives yet: a comprehensive overhaul of the nation’s tax system.
Spearheaded by the Federal Inland Revenue Service (FIRS) under Dr. Zacch Adedeji and the Presidential Fiscal Policy and Tax Reforms Committee (PFPTC) chaired by Mr. Taiwo Oyedele, this reform agenda aims to create a fairer, more efficient, and development-oriented fiscal framework.
At the heart of the effort are four newly passed bills:
- Nigeria Tax Bill 2024
- Nigeria Tax Administration Bill 2025
- Nigeria Revenue Service (Establishment) Bill 2025
- Joint Revenue Board (Establishment) Bill 2025
These bills seek to unify tax collection under a centralized Nigeria Revenue Service (NRS), ending the fragmentation. The goal: improved transparency, compliance, and efficiency.
The reform also targets Nigeria’s long-standing challenge with multiple, duplicative, and predatory taxes. The Tax Administration Bill eliminates nuisance levies and proposes a Joint Revenue Board to harmonize tax rates nationwide and create a unified taxpayer database—a huge relief for MSMEs.
“We are creating one taxpayer, one database, one interface,” Mr. Oyedele said, stating that the system had become “a jungle.” He also said:
“Our goal is simple — build a tax system that works for all Nigerians. We want the poor protected, the middle class empowered, and the wealthy accountable.”
Key elements of the reform include:
Tax Rates & Major Fiscal Changes
VAT: Remains at 7.5%
- Contrary to the presidency’s proposal to increase VAT to 12.5%, the National Assembly retained the rate at 7.5%.
Corporate Income Tax (CIT): Held at 30%
- The CIT rate stays unchanged at 30% for now.
Personal Income Tax Relief
- Employees earning minimum wage (~N800,000/year) and below are exempt from personal income tax.
Minimum Tax & Global Minimum Tax
- Companies with no profit are exempt from the 0.5% turnover minimum tax.
- However, multinationals below a 15% effective tax rate may face a top-up or global minimum tax.
Development Levy (4%)
- Introduces 4% levy with a new beneficiary-sharing formula:
- TETFUND 50%, NELFUND 15%, NITDA 10%, Science & Engineering 10%, Cybersecurity 5%, Defence 10%.
VAT Revenue Sharing Reform
- The revised formula directs states 55%, LGs 35%, and federal govt. 10%.
- Derivation principle redefined as the place of consumption.
Regulatory & Administrative Changes
- Nigeria Revenue Service (NRS) replaces FIRS; introduces a new board structure, including a Senate-confirmed Executive Vice Chairman.
- Tax Appeal Tribunal expanded in scope; Office of Tax Ombud established for taxpayer disputes.
- Stricter penalties for non-compliance (e.g., failure to register, file returns, maintain books).
Sector-Specific Adjustments & Clarifications
- Capital Gains Tax to align with corporate income tax rates (no more separate 10% regime).
- VAT on essentials (food, education, health, rent, public transport, renewable energy) will be set to 0%.
- Tax incentives are restructured—Pioneer Status is replaced by a new Economic Development Tax Incentive.
- Excise duties extended to include services, digitalisation tools mandated (e invoicing, and VAT fiscalisation).
- Top-up tax on multinationals ensures at least 15% ETR.
On the administrative side, FIRS has also launched a revised Standard Operating Procedure (SOP) to standardize processes like registration, payments, and audits across its 300+ offices nationwide. The goal is “consistency, transparency, and service.”
“This SOP is a declaration of who we are becoming,” stated Dr. Adedeji, highlighting the FIRS’ transformation into a modern, service-driven institution.
The reforms place strong emphasis on digitalization, aiming to automate tax assessments and bring digital platforms, social media influencers, and streaming services into the tax net. This automation reduces human interference — a major source of corruption.
While some concerns remain — especially from state governments fearing loss of revenue control — the reform’s long-term outlook is aimed at building public trust and encouraging voluntary compliance.
“This is about equity,” said Dr. Adedeji. “We are shifting to a system where taxes reflect ability to pay and contribute to lifting people out of poverty.” He, also speaking on the bills said: “The passage of these tax bills marks a turning point in our fiscal history. Centralizing revenue collection under the NRS will drive accountability, efficiency, and investor confidence.”
