Nigerians expect the new tax laws to boost revenue generation while providing much-needed relief to businesses and individuals through a more transparent, simplified, and equitable tax system, writes Festus Akanbi
Last Thursday’s signing into law of four new tax legislations has sparked cautious optimism across Nigeria, as the country grapples with the urgent need to boost domestic revenue, ease the burden on the poor, and create a more predictable operating environment for businesses.
President Bola Tinubu, at the signing ceremony, described the sweeping new legislations as pivotal to the success of the administration’s reforms and the country’s prosperity.
The laws are the Nigeria Tax Act (Ease of Doing Business), which aims to consolidate Nigeria’s fragmented tax laws into a harmonised statute; the Nigeria Tax Administration Act, which will establish a uniform legal and operational framework for tax administration across federal, state, and local governments.
Others are the Nigeria Revenue Service (Establishment) Act, which repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven national revenue agency— the Nigeria Revenue Service (NRS); and the Joint Revenue Board (Establishment) Act, which provides for a formal governance structure to facilitate cooperation between revenue authorities at all levels of government.
Fiscal Sustainability
These reforms, aimed at expanding the tax net, improving compliance, and curbing arbitrary levies, are seen as a bold step toward fiscal sustainability. For a nation struggling with mounting debt and dwindling oil revenues, the new tax framework offers a glimmer of hope, promising not only to strengthen government finances but also to foster economic inclusiveness by protecting low-income earners and reducing the cost of doing business in the country.
The Federal Inland Revenue Service (FIRS) reported a record-breaking tax collection of N21.6 trillion in 2024, surpassing its initial target of N19.4 trillion by approximately 11.3%.
This milestone was largely driven by non‑oil tax revenues, marking a notable improvement in domestic revenue mobilisation and indicating a shift toward a more resilient fiscal framework.
As the Nigerian Revenue Service (NRS) emerges from the transformation of the former Federal Inland Revenue Service (FIRS) therefore, all eyes are on its capacity to drive the successful implementation of the new tax laws and serve as the central tax authority in the country.
Expectations are high that the NRS will bring professionalism, transparency, and efficiency to tax collection, unifying a fragmented system plagued by duplication and leakages.
However, questions persist about whether the new agency has the institutional strength, technological infrastructure, and political backing to assume the role of sole tax collector in a complex federation where states have long guarded their taxing powers.
Watchers of the unfolding development said the success of the NRS will ultimately depend on its ability to build public trust, enforce compliance fairly, and deliver measurable improvements in revenue generation without worsening the burden on businesses and citizens.
Presently, Nigeria’s tax system is mired in confusion and inefficiency, marked by rampant duplication of taxes at both federal and state levels, leaving businesses overwhelmed and frustrated. Instead of fostering productivity, the multiplicity of levies has created a chaotic environment where companies are hounded by tax contractors who often act with impunity, extorting payments under the guise of enforcement.
This disjointed structure has opened the floodgates for corrupt tax officials to exploit loopholes for personal gain, diverting revenues that should bolster national development. The result is a suffocating burden on enterprises and individuals alike, discouraging investment and deepening the crisis of trust in the nation’s fiscal governance.
Changing the Narrative
Analysts believed it was this scenario that left President Tinubu with no option but to push for the overhaul of the tax system to better the lot of the Nigerian people. This was attested to by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, who described the newly signed tax laws as “pro-poor,” saying they will ease the burden on low-income earners, small business owners, and everyday Nigerians.
He said, “More than 1/3 of workers in both the private and public sectors will now be exempted completely from PAYE.
“They will not have to pay personal income tax. Small businesses, over 90 per cent of small and micro, nano businesses, will no longer have to worry about paying corporate income tax or charging VAT or even deducting withholding tax or paying PAYE for their employees.”
Oyedele added that the reforms will leave “More money in the hands of the ordinary Nigerian to take care of their daily needs,” and announced a new zero-rate VAT framework on essential items.
“Any traces of VAT in food, in education, in medical and health care are now removed completely, so we should see prices of those items come down,” Oyedele explained.
He also emphasised relief for sectors where households spend most, clarifying that “Transportation, accommodation and housing are exempted from VAT… collectively account for more than 80 per cent of where Nigerians spend their money. That’s a huge relief for them.”
Oyedele further noted that the reforms include measures to boost tax collection efficiency and transparency.
He said, “Provisions have been made to help us improve efficiency in how we collect taxes, and also efficiency in the transparency of reporting the taxes we collect, which we expect should then be linked to how those taxes are utilised for the benefit of the people.”
Crossing the Hurdle of Implementation
There is growing apprehension that the entrenched interests of some state governors, who heavily rely on tax consultants for revenue collection, may pose a significant obstacle to the successful implementation of the new tax laws.
These consultants, often operating with minimal oversight, have become powerful intermediaries with vested interests in the existing chaotic system that allows for multiple, and sometimes illegal, levies.
Many fear that governors who benefit politically or financially from these arrangements may resist reforms that seek to streamline and centralize tax administration. Without strong political will and coordinated enforcement mechanisms, the new laws risk being undermined by those who stand to lose from a more transparent and accountable tax regime.
While Nigerians are still apprehensive over a possible backlash when it becomes fully operational, businesses are cautiously optimistic, believing it can only get better.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said reform is a journey and not a destination.
According to him, there are high expectations in terms of the good things the laws promise to make the business environment friendlier.
“We watch to see how they come to light,” he said, adding, “No reform is perfect. It is in the implementation that we will know which areas need to be retouched. In all, it is a good way to start.”
Also speaking on the new tax laws, which he described as historic and audacious, Prof. Godwin Oyedokun of Lead City University said the new tax reform laws will address various economic challenges, especially improving the business environment and enhancing revenue generation.
“The new tax laws present opportunities for enhancing Nigeria’s economic landscape.
With Nigeria’s rising debt profile and mounting fiscal pressures, there is a growing belief that efficient tax collection could serve as a sustainable alternative to the country’s overreliance on loans to meet its financial needs.
By expanding the tax base, plugging leakages, and ensuring transparency and accountability in revenue administration, the government can significantly increase its internally generated revenue. This shift would not only reduce the debt burden but also enhance national sovereignty by minimising dependence on external lenders.
Analysts said that if well implemented, the new tax laws and a streamlined revenue collection system, anchored by a capable Nigerian Revenue Service, could provide a steady and predictable stream of income to fund infrastructure, social services, and economic development, thereby curbing the current appetite for borrowing.
Nigerians hold high expectations from the newly signed tax laws, seeing them as a long-overdue opportunity to bring sanity, fairness, and efficiency to the country’s tax system.
Companies are particularly hopeful that the reforms will simplify tax administration, eliminate overlapping levies, and reduce the harassment and arbitrary charges that have stifled business growth.
On the other hand, ordinary citizens, especially the poor, look forward to measures that will ease their financial burdens, shield them from exploitative tax practices, and ensure that government revenue is increased through broader compliance rather than deeper suffering.
Ultimately, there is a shared hope that these laws will lay the foundation for a more equitable, transparent, and development-focused tax regime.
