FGN
By Olamilekan Abayomi
The Federal Government of Nigeria has confirmed that the new tax laws will take effect on January 1, 2026, as planned. These laws, signed by President Bola Tinubu on June 26, 2025, aim to simplify tax compliance, expand the tax base, and modernize revenue collection across federal, state, and local levels.
The new laws include the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. They will govern taxation in Nigeria, replacing over a dozen outdated tax statutes. Key changes include a new progressive personal income tax structure, exemptions for low-income earners, and increased taxes for high-income individuals.
Under the new laws, individuals earning below ₦800,000 annually will be exempt from personal income tax. Those earning above ₦50 million will be taxed at 25%. Small businesses with turnover under ₦100 million and assets below ₦250 million are exempt from corporate income tax, capital gains tax, and a new 4% development levy.
The Nigeria Extractive Industries Transparency Initiative (NEITI) recommends reviewing the new tax laws after five years to reflect evolving fiscal realities and strengthen institutional oversight. The African Democratic Congress (ADC) has called for suspending the laws, alleging post-passage alterations, which the government denies.
The new tax laws aim to increase Nigeria’s tax-to-GDP ratio from around 10% to at least 18%. The Nigeria Revenue Service will strengthen digital enforcement, and taxpayers are urged to prepare for the changes.
The implementation of these laws has sparked controversy, with some groups warning of economic hardship for salaried workers and mid-sized businesses. Supporters argue the laws will simplify taxes and incentivize investments.
