Bola Tinubu has signed four bills into law, aiming to overhaul Nigeria’s tax system.
The government said that the new laws will simplify revenue collection, reduce the tax burden on some individuals and businesses, while also helping to raise much-needed government revenue by making collection more efficient.
The four bills signed into law are the Nigeria Tax Bill, the Nigerian Tax Administration Bill, the National Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.
The reforms will take effect from 1 January 2026.
Here is a breakdown of the recently passed tax reform.
President Bola Ahmed Tinubu has signed the Tax Reform Bills into law, marking a significant shift in our tax system. As a Nigerian, this new law directly affects you. This is a simple breakdown of the law; read on to see how it impacts you.
1. FIRS Renamed: The Federal Inland Revenue Service (FIRS) is now called the Nigeria Revenue Service (NRS).
2. Unified Revenue Collection: The NRS will now handle revenue collections previously managed by agencies like the Nigeria Customs Service, NUPRC, NPA, and NIMASA.
3. Low-Income Relief: Workers earning ₦800,000 or less annually are now exempted from income tax.
4. High-Income Tax: A 25% personal income tax applies only to individuals earning above ₦50 million annually.
5. Small Business Exemption: Small business owners are fully exempt from paying income tax.
6. Corporate Tax Cut: Starting in 2026, company income tax for medium and large firms will be reduced from 30% to 25%.
7. VAT Exemptions on Essentials: There is no VAT on essential items like food, medical services, pharmaceuticals, school fees, and electricity.
8. No Tax Hike: VAT remains at 7.5%, and corporate income tax stays at 30%—there has been no increase.
9. New Development Levy: A 2%–4% Development Levy will now fund critical national institutions like NELFUND, TETFund, NITDA, and NASENI.
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