* Zach Adedeji
The Pathfinder
Friday June 27, 2025
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Federal Inland Revenue Service has said that the newly signed four tax fiscal reform laws will not be implemented until January 1, 2026.
FIRS Chairman, Zach Adedeji, who addressed State House correspondents shortly after the President signed the bills into law, however, said the modalities will be put in place ahead of the implementation.
Adedeji added that the six months between the enactment of the new fiscal laws are designed to give ample time to those saddled with the implementation to carefully prepare and ensure that all Nigerians are adequately sensitized.
Adedeji further said that the FIRS, by the signing of the bills into Law, is now the Nigeria Revenue Service.
He explained that the new law now defines the NRS’s expanded mandate, including non-tax revenue collection, and lays out transparency, accountability, and efficiency mechanisms.
He said, “The Nigeria Revenue Service (Establishment) Bill, the third bill, repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven National Revenue Agency.
“Two hours ago before we were FIRS, now we are Nigeria Revenue Service with expanded scope to focus on tax collection and with match efficiency.”
Chairman of the Presidential Committee on Tax Reforms, Taiwo Oyedele, said President Bola Tinubu had directed the proper implementation of the laws while ensuring the collective participation of all stakeholders.
He said, “The journey is just beginning; writing the law, no matter how beautiful, no matter how transformative, no matter how innovative, it means nothing if it is not properly implemented. So, we are mindful of that. We are not going to relax.
“Mr President has given us the charge that now is time to move to implementation, and we are ready. We are prepared. It is not something we can’t do alone, even from the government side. It’s something we have to be collective about.”
Oyedele also stated that the committee will now include the private sector, public sector, civil society, professional bodies as well as international partners.
“The private sector, public sector, civil society, professional bodies, etc? Tax consultants, everyone, including our international partners, who mean well will work for Nigeria,” he said.
What To Know About Nigeria’s New Tax Law
Nigeria’s President Bola Tinubu on Thursday signed four finance bills into law in a set of major reforms aimed at restructuring the tax system.
The government says the new laws will simplify revenue collection and reduce the tax burden on some individuals and businesses while also helping to raise much-needed government income revenue by making collection more efficient.
“The tax reforms will protect low-income households and support workers by expanding their disposable income,” said President Tinubu in a statement to mark the second anniversary of his administration last month.
What reforms were made?
The four new laws are:
The Nigeria Tax Act merges various rules into a single, easier-to-understand code and eliminates more than 50 small, overlapping taxes. The presidency has said that reducing the number of taxes and eliminating duplication, will make doing business easier
The Tax Administration Act sets common rules for how taxes are collected across federal, state, and local governments
The Nigeria Revenue Service Act, which replaces the Federal Inland Revenue Service (FIRS) with a new, independent agency – the Nigeria Revenue Service (NRS)
The Joint Revenue Board Act improves coordination between levels of government and creates a Tax Ombudsman and Tax Appeal Tribunal to resolve disputes
Together, these laws aim to create a fairer and more efficient tax system across the country, the Nigerian government says.
What difference will they make?
The impact is expected to be significant, especially for low-income earners, small businesses,, and informal traders.
For people earning up to N1m a year, a rent relief of N200,000 will be applied, effectively reducing their taxable income to N800,000. This means they will no longer pay income tax, according to Andersen Nigeria, a tax and business advisory firm.
Sellers of essential goods and services such as food, healthcare, education, rent, power, and baby products will no longer have to charge a Value Added Tax (VAT), helping families better afford their basic needs.
Small businesses with annual turnover below N50m will no longer pay company income tax. They will also be allowed to file simpler returns, without needing audited accounts.
Large businesses will benefit from reduced corporate tax rates, dropping from 30% to 27.5% in 2025 and 25% in subsequent years.
They will also now be able to claim tax credits for VAT paid on expenses and assets, meaning they can get back the 7.5% that would have been paid as VAT.
There are also tax incentives for charitable groups, co-operatives, and educational and religious organizations, provided their earnings do not come from commercial activities.
Who will be affected the most?
Low-income households stand to benefit the most, as many will no longer have to pay income tax while also enjoying price relief on essentials. A typical family spending most of their income on rent, food, and transport will see lower costs due to the VAT exemptions.
Small businesses should also see positive changes through more streamlined bureaucracy, which could help boost compliance and encourage informal traders to enter the tax system.
High-income individuals and luxury consumers may feel the pinch slightly, with higher VAT now expected on luxury goods and premium services, and capital gains tax imposed on large share sales.
Were the reforms necessary?
The government argued that the tax system was outdated, inefficient, and unfairly harsh on the poor. Nigeria’s tax-to-GDP ratio, a key measure of how much tax the country collects relative to its economy is just over 10%, far below the African average of 16–18%.
Tinubu’s administration wants to grow that ratio to 18% by 2026 without raising taxes on basic goods or overburdening struggling citizens.
By simplifying tax rules and encouraging voluntary compliance, officials hope to raise more money for funding infrastructure and public services, such as healthcare and education, as well as reduce the reliance on borrowing money.
What are Nigerians saying?
Many small business owners welcome the exemption from company income tax but say they remain wary of how it will be enforced in practice.
For low-income earners, the promise of cheaper essential goods like food, rent, and electricity is encouraging, but many are reserving judgment.
While the new tax reforms promise relief for small businesses, economist Emmanuel Idenyi warns that the reality may be different unless enforcement practices change. He says overzealous implementation by tax authorities could undermine the government’s good intentions.
“Even tax officials have revenue targets. So when you file, they reassess and add more. That’s where businesses start struggling.”
Meanwhile, Taiwo Oyedele, who chairs the Presidential Fiscal Policy and Tax Reform Committee, struck a hopeful tone during a recent town hall meeting.
“Ninety percent of Nigerians support the tax reform bills,” he said, but cautioned that “successful implementation will depend on awareness and trust”.
BBC
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