Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele came prepared. As a Professor of Practice at Babcock University, he knows his onions. He only just celebrated his fiftieth birthday and delivered what appeared to be an impossible task for his master, President Bola Tinubu. At first, it appeared like mission impossible. Many, especially northern senators with Ali Ndume as the ringleader, were up in arms against him, or rather against the tax bills. I was on their side too. Who likes to pay more tax anyway; especially in climes where the benefits are drifting to near zero.
The Chairman kept his cool, and then unleashed a massive wave of enlightenment campaign to push for the tax reforms bills. He won many hearts, and the naysayers were muted. Last week, he delivered on his assignment as the President inked the four tax bills into law. He proved that he is indeed a policy advocate.
The four new laws are:
- The Nigeria Tax Act (this merges various rules into a single, easier-to-understand code and eliminates many)
- The Tax Administration Act (sets common rules for how taxes are collected across federal, state, and local governments)
- The Nigeria Revenue Service Act (replaces the Federal Inland Revenue Service with a new agency — the Nigeria Revenue Service; and
- The Joint Revenue Board Act, (improves co-ordination between levels of government and creates a Tax Ombudsman and Tax Appeal Tribunal to resolve disputes)
Though an improvement on what obtained before now, this is still unwieldy; the National Assembly missed an opportunity to merge these four laws into one single law after the manner of the Petroleum Industry Act (PIA). Perhaps it was running against time to deliver what the master wanted!
The laws are expected to bring relief to Nigerians, restore fairness in the tax system, ignite inclusive economic growth as well as aid in the ease of doing business. That’s on paper; the devil is always in the details. We are very good at making fine laws and policies and extremely bad at implementing them. For instance, who will drive away the local government touts who man illegal tolls (even in Lekki, Lagos) and collect money (a chunk of it ends up in their pockets as political settlements) from those who earn below the taxable limit?
So, what do these tax laws mean to Nigerians; how will they affect our everyday lives; will you or your business end up paying more or less (and in some cases zero tax)? A disclaimer is appropriate here: I am not a tax expert; but I know a thing or two about taxes. After all I have been paying tax for over three decades now…even when I was earning N10,000 a year (yes, N10,000 per annum!).
From my prism, I can argue that these laws are a mixed bag. Firstly, the already very poorly paid Nigerians will be exempted from paying tax or paying lower rates than they currently do. The Act has a provision for those earning N800,000 per annum (which is just mirroring the abysmally low national minimum wage of N70,000 a month) not to pay tax. On the surface, this is good news; but it is merely skin deep because majority of civil servants and those in poorly paying private sector jobs earn more than the minimum wage. So, this tax exempt is only clever by half as it has not addressed the concerns of majority of those in the poverty bracket.
Conversely, those who earn a hefty N50 million and above per annum will be required to pay more taxes than they currently do as the new law increases their tax rate from roughly 19% to about 25 percent. It is people in this bracket, the so-called one percent of the one percent, who stimulate economic activities more. Now a quarter of their income is going to be taken away by the government. The assumption is that government will spend this money providing basic services for all. In Nigeria, that is wishful thinking because it is these same people who will end up providing their own security, water, electricity, and in some cases roads for themselves, things that are taken for granted in many countries.
Additionally, it is people in this income bracket who proportionately consume more industrial goods such as electronics and automobiles; shop in supermarkets, eat in high end restaurants, send their children to quality schools; patronize hotels and cinemas, employ domestic workers, consume “Band A” electricity, stimulate the property industry, fill their car tanks with petrol, and go on vacations. By so doing, they keep the jobs of millions of low and middle income workers. When a quarter of their income has been shaved off, they can scale back on these activities thus hurting the economy.
In another breath, the removal of Value Added Tax (VAT) from certain items is a big win for both businesses and consumers. Essential goods and services such as food, healthcare, education, rent, power, and baby products will no longer have to charge VAT helping families better afford their basic needs. This has a way of stimulating economic growth through increased consumption and production as it is hoped that manufacturers and merchants will reduce the prices of these goods and services.
Additionally, businesses with annual turnover below N50 million will no longer pay Company Income Tax (CIT). They will also be allowed to file simpler returns, without needing audited accounts. This is excellent, if you ask me. The Nigerian business climate suffocates micro, small and medium sized businesses through multiple taxation. It is hoped that with CIT out of the way for small businesses, there will be some breather as some of these businesses will be able to scale and generate employment; and the mortality rate of Micro, Small, and Medium Enterprises will reduce. There is, however, a big IF: if state and local governments will not impose additional taxes on them.
Large businesses with N50 million and above revenues will benefit from reduced corporate tax rates, dropping from 30% to 25%. This is also a big relief as these companies can plough the 5% relief into research, development and innovative products and services that further serve the interests of everyone better.
Already, Femi Otedola, one of the country’s super rich, has voiced the opinion of his class to the effect that the tax reform acts have encouraged him to invest more in the local economy. If properly implemented, there should be increase in economic activity in the medium to long term.
There are also tax incentives for charitable groups, co-operatives, educational and religious organisations, provided their earnings do not come from commercial activities. I do not think this is entirely new as I am not aware that charities and religious organizations were paying taxes on their core functions. But it is worth codifying for legal purposes.
Where I see a major a bottleneck, even if short term, is in the enforcement of the Nigeria Revenue Service Act. This act does not only abolish the Federal Inland Revenue Service and replaces it with the Nigeria Revenue Service (NRS) but also vests the responsibility of collecting revenues previously handled by agencies such as the Nigeria Customs Service, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Ports Authority, and the Nigerian Maritime Administration and Security Agency. The newly formed NRS will not only be a behemoth, these other federal agencies will frustrate its efforts to take over their revenue collection functions. Especially for Nigerian Customs, Ports Authority and the Nigerian Maritime Administration and Safety Agency, revenue collection appears to be their primary function, so taking over that role is like removing candy from the mouth of a child. The cries will reverberate for long.
On the whole, the tax reforms laws, which come into effect 1 January 2026, if faithfully implemented will be good for the economy. Kudos to President Tinubu and his taxmen, especially Oyedele.
Short take
I must be Governor by all means
This is exactly what Siminalayi Fubara, the suspended governor of Rivers State, is telling Nigerians. As to be expected, by accepting the death pill sugarcoated as peace accord “brokered” by the President, Fubara has proved that he never was principled in the first place.
He does not even care about those Rivers people who fought for him. Once again, Fubara is characteristically a 21st century Nigerian politician. They stand for nothing, unprincipled, spineless, no scruples. Even with his current political castration, I am almost certain that he will be further humiliated to continue to remain as governor. Shame.
Esiere is a former journalist!
©️2025
