Tinubu Signs Landmark Tax Reform Acts, Reshaping Nigeria’s Fiscal System

In a historic move to overhaul Nigeria’s tax and revenue systems, President Bola Tinubu has signed into law four transformative tax reform Acts that are set to redefine the country’s fiscal landscape. The signing, held at the Presidential Villa in Abuja and witnessed by key government leaders—including the Senate President, House Speaker, Minister of Finance, and Attorney General—marks a major milestone in Nigeria’s economic reform agenda.

The new laws were passed by the National Assembly following wide-ranging consultations with stakeholders across the public and private sectors.

The Four Groundbreaking Acts

1. Nigeria Tax Act (NTA)
   Consolidates Nigeria’s previously fragmented and overlapping tax laws into a unified statute. It repeals outdated laws such as CITA, PITA, CGTA, and the VAT Act—making the tax code clearer, simpler, and more business-friendly.
2. Nigeria Tax Administration Act (NTAA)
   Establishes a uniform legal and operational framework for tax administration across federal, state, and local levels. This eliminates jurisdictional conflicts and harmonizes processes nationwide.
3. Nigeria Revenue Service (Establishment) Act (NRSEA)
   Replaces the Federal Inland Revenue Service (FIRS) with a more autonomous and accountable Nigeria Revenue Service (NRS). The NRS is tasked with expanded responsibilities, including non-tax revenue collection, digital audits, enforcement actions, and institutional reforms to enhance transparency.
4. Joint Revenue Board (Establishment) Act (JRBEA)
   Sets up a governance framework to coordinate tax policy and administration across all levels of government. It also establishes two key institutions:
   • The Tax Appeal Tribunal (TAT) with court-like powers for resolving disputes
   • The Office of the Tax Ombudsman, to protect taxpayer rights and address grievances

Key Features of the Tax Reform

1. Unified & Simplified Tax Code

• Over 50 overlapping taxes repealed and merged into a simplified framework
• Increased ease of doing business and clarity for taxpayers
• Target to grow Nigeria’s tax-to-GDP ratio from 10% to 18% by 2026

2. New and Modified Tax Instruments

• Development Levy: 4% on company profits (exempting small businesses)
• Effective Tax Rate (ETR): Minimum 15% for large corporates and MNEs (≥ ₦50bn or €750m turnover)
• Fossil Fuel Surcharge: 5% on petroleum products
• Digital Asset Taxation: Crypto, NFTs, and other virtual assets now taxable
• Capital Gains Tax (CGT): Raised from 10% to 30% for companies

3. Expanded VAT Structure

• Rate remains 7.5% in the near term (despite earlier speculation of rate hikes)
• VAT now applies to digital services, SaaS, and online platforms
• Exemptions (zero-rated): Food, education, public transport, healthcare
• VAT sharing formula revised: 50% equally to states, 30% by consumption, 20% by population
• Mandatory e-invoicing and VAT fiscalisation systems introduced

4. Robust Tax Administration

• Nigeria Revenue Service empowered to trace, freeze, and recover taxes
• State IRS agencies granted full autonomy
• Centralised taxpayer database and digital audit tools deployed
• Introduction of whistleblower protection and reward system
• New penalties and enforcement provisions for non-compliance

5. Taxpayer Rights and Protections

• Tax Ombud established to investigate taxpayer complaints and systemic issues
• Tax Appeal Tribunal operationalised with binding rulings and defined appeal timelines
• Income now includes non-cash benefits (cars, housing, vouchers) and offshore income for residents

Strategic Business Implications

Compliance Deadlines:

• CIT: Within 6 months of financial year-end
• PAYE: By January 31
• Individual Returns: By March 31
• VAT & WHT: 21st of each month

Incentives and Reliefs:

• Small businesses (< ₦100m turnover) are exempt from CIT, CGT, and Development Levy
• Large corporates gain input VAT credits and tax loss offsetting
• Capital investment tax credits under the Economic Development Incentive (EDI)

Disclosure Obligations:

• All tax planning strategies must be disclosed
• Non-compliance attracts penalties of ₦100,000/month or ₦5m+ for major breaches

Broader Economic Impact

• Revenue Generation: Reforms are expected to drastically improve tax compliance and expand the base.
• Investment Boost: A simplified, transparent tax framework is likely to attract both local and foreign investors.
• Development Financing: Increased revenue will fund education, healthcare, roads, power, and digital infrastructure.
• Equity and Fairness: Progressive tax structure exempts low-income earners (earning < ₦250,000/month) and protects essential services from VAT.

Conclusion

The signing of the four Tax Reform Acts marks a transformational moment in Nigeria’s fiscal evolution. By consolidating outdated laws, empowering institutions, broadening the tax net, and simplifying compliance, the Tinubu administration is laying the groundwork for a modern, equitable, and investment-friendly tax regime.

As these reforms take effect from January 1, 2026, businesses, HR leaders, and individual taxpayers alike must take proactive steps to understand, adapt, and comply with the new rules. This is not just tax reform—it is a national economic reset.