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Things To Know About Nigeria’s New Tax Laws

Published

11 months ago

June 27, 2025

President Bola Tinubu on Thursday signed four new tax laws aimed at modernising and streamlining the country’s tax system.

In the new tax law, the Value Added Tax rate remains at 7.5 per cent despite initial proposals to increase to 12.5 per cent, but its scope is expanded.

Essential items—such as food, education, healthcare, public transport, residential rent, and exports—are zero-rated to ease inflationary pressure.

For revenue allocation is restructured: now 30 per cent of VAT proceeds are distributed based on consumption (rather than contribution), 50 per cent equally among states, and 20 per cent to population-based allocation.

With the latest development, it is expected that state revenue streams will increase, and it will also discourage tax evasion.

Overview of the four new laws

Nigeria Tax Act: Consolidates various tax rules into a single, simplified code, eliminating over 50 small, overlapping taxes. This reduces complexity and duplication, making it easier for businesses to comply.

Tax Administration Act: Establishes uniform rules for tax collection across federal, state, and local governments, ensuring consistency and reducing administrative conflicts.

Nigeria Revenue Service Act: Replaces the Federal Inland Revenue Service with the independent Nigeria Revenue Service, aiming for greater efficiency and autonomy in tax administration.

Joint Revenue Board Act: Enhances coordination between different government levels and introduces a Tax Ombudsman and Tax Appeal Tribunal to handle disputes fairly.

Key objectives of the new tax rules

Simplify Tax System: Reduces bureaucratic hurdles and overlapping taxes to make compliance easier, especially for small businesses and informal traders.

Increase Revenue Efficiency: Aims to boost Nigeria’s tax-to-GDP ratio from 10% (below the African average of 16–18%) to 18 per cent by 2026 without raising taxes on essential goods.

Reduce Financial Burden: Provides relief for low-income households and small businesses while ensuring high-income earners and luxury consumers contribute more.

Fund Public Services: Increased revenue will support infrastructure, healthcare, and education, reducing reliance on borrowing.

Who benefits and how
Low-Income Households:
Individuals earning up to ₦1 million ($650) annually receive a ₦200,000 rent relief, reducing taxable income to ₦800,000, exempting them from income tax.

VAT exemptions on essential goods and services (food, healthcare, education, rent, power, baby products) lower living costs.

Small businesses:

Businesses with an annual turnover below ₦50 million ($32,400) are exempt from company income tax.
Simplified tax filing without requiring audited accounts reduces compliance costs.

Large businesses:

Corporate tax rates drop from 30 per cent to 27.5 per cent in 2025 and 25 per cent thereafter.
Tax credits for VAT paid on expenses and assets allow businesses to recover the 7.5 per cent VAT.

Charitable, educational, and religious organisations:

Tax incentives for non-commercial earnings, encouraging community-focused activities.
Impact on different groups
Low-Income Earners: Benefit most from income tax exemptions and lower costs for essentials, increasing disposable income.

Small Businesses and informal traders: Simplified rules and tax exemptions encourage compliance and reduce financial strain, potentially formalising more businesses.

High-income earners and luxury consumers face higher VAT on luxury goods and premium services, plus capital gains tax on large share sales.

Government: Expects increased revenue for public services without overburdening vulnerable citizens.

Why reforms were needed

Nigeria’s tax system was outdated, inefficient, and disproportionately harsh on low-income groups.
The low tax-to-GDP ratio (10%) limited funding for critical services like healthcare and infrastructure.
Overlapping taxes and complex rules deterred compliance, especially among small businesses and informal traders.
Public and expert reactions

Positive sentiment: Small business owners welcome tax exemptions but seek clarity on enforcement to avoid unexpected levies.

Low-income earners appreciate relief on essentials but remain cautious about implementation.
Taiwo Oyedele, head of the Presidential Fiscal Policy and Tax Reform Committee, claims 90% public support, emphasising that success depends on awareness and trust.

The reforms align with Tinubu’s administration’s goal to reduce economic inequality and boost fiscal capacity without overburdening citizens.

By encouraging voluntary compliance and reducing reliance on loans, Nigeria aims to strengthen its economy and fund development projects.

These reforms mark a significant step toward a fairer, more efficient tax system, with a focus on supporting vulnerable groups while fostering economic growth. However, their success hinges on transparent enforcement and public trust. For further details, you can refer to official statements from the Nigerian government or credible news sources covering the reforms.
(PUNCH)

News

Children’s Day: Chaos At Ogbe Stadium As Dozens Faint

Published

13 hours ago

May 27, 2026

Editor

Chaos erupted on Wednesday during the Children’s Day celebration as dozens of students reportedly collapsed following a stampede triggered by the use of pepper spray.

The event,
organised by the Edo State Ministry of Education at the Samuel Ogbemudia Stadium was disrupted after some male students of Ihogbe College allegedly made uncompromising advances towards female students at the venue.
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‎ A parent who identified himself as Oboh Emmanuel said, “the behaviour of those uncultured students attracted the attention of bouncers stationed at the stadium as they rebuked the male students.”
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‎Oboh said the affected students later regrouped and attacked the bouncers, leading to a confrontation within the crowded arena.

READ ALSO:Children’s Day: Edo Commits To Child Protection
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It was gathered that in the ensuing confusion, the bouncers were reported to have deployed pepper spray in an area occupied by a large number of students.
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‎Several students, particularly female students, reportedly fainted after inhaling the substance, while others sustained injuries after being stepped on during the ensuing melee.
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‎The panic was said to have spread across the stadium as students, teachers and parents scampered for safety.
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‎Many of the affected students were reportedly rushed to the Edo Specialist Hospital for medical attention.

Reacting to the incident, Chief Press Secretary to Governor Monday Okpebholo, Dr Patrick Ebojele, said the security personnel that fired the tear gas had been detained.

He said all the students, except two, that were rushed to the hospital have been discharged.

Ebojele stated that doctors wanted to observe the students till tomorrow before allowing them to go home.

“The two students are not seriously injured. Doctors want to observe them overnight. Permanent Secretary, Ministry of Education is still at the hospital. The man who used pepper spray has been detained.

“The incident did not happen the way it is being exaggerated. All modalities were put in place to ensure the children enjoyed their day.”
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News

Okpebholo Salutes Edo Muslims, Seeks Continued Support, Prayers

Published

14 hours ago

May 27, 2026

Editor

Governor Monday Okpebholo of Edo State has urged Muslims and all Nigerians to continue to pray for peace, unity and progress in the country even as they celebrate the annual Eid-al-Adha

The governor, who was represented by his deputy, Dennis Idahosa, stated this during the annual Eid-al-Adha celebration with Muslim faithfuls held at Government House in Benin City.

He reiterated his administration’s commitment to fairness, inclusivity and equal opportunities for all citizens irrespective of religion and tribe.

According to him, the present administration remains determined to building a government that reflects the diversity of Edo State, noting that competent and qualified Muslims have continued to play vital roles in his government because of their capacity, integrity and commitment to service.

“As a government, we remain committed to fairness, inclusivity and equal opportunity for every Edo citizen, irrespective of religion, ethnicity or political affiliation. This is why quality and competent Muslims are serving in key positions in our administration.”

Okpebholo appreciated the Muslim community in Edo State for their unwavering support and continuous prayers for his administration, noting that such prayers and support have contributed immensely to the peace and steady development being witnessed across the state.

He then called on all Nigerians to use the occasion of Eid-al-Adha to pray for the administration of President Bola Ahmed Tinubu, stressing that the country needs collective prayers, unity and cooperation to overcome its present economic and security challenges.

“I urge all Muslims and indeed all Nigerians to use this occasion to pray for our dear nation and for the administration of President Bola Ahmed Tinubu. Nigeria needs our collective prayers, unity and support as we strive to overcome our challenges and build a more prosperous future for all.”

In his remarks, the Chief Imam of Edo State, Abdulfatai Enabulele, applauded the governor for what he described as remarkable developmental strides recorded in less than two years in office.

The cleric commended the administration for ongoing infrastructural development and efforts geared towards improving governance in the state, but appealed to the government to revisit and complete some abandoned projects inherited from the previous administration for the benefit of the people.

News

Children’s Day: Edo Commits To Child Protection

Published

14 hours ago

May 27, 2026

Editor

The Edo State Government has reaffirmed its commitment to protecting the rights of children, promoting quality education, and strengthening sports development across the state.

This assurance was given by the governor of Edo State, Monday Okpebholo, during the 2026 Children’s Day Celebration and Governor’s Cup Finale held on Wednesday at the Samuel Ogbemudia Stadium, Benin City.

Addressing pupils, students and teachers,
the governor described children as the pride of Edo State and the future of the nation.

The governor, represented by his deputy, Dennis Idahosa,
noted that the annual celebration provides an opportunity to honour their dreams, talents, and limitless potential.

Speaking on this year’s Children’s Day theme, “Choose Kindness, Reject Bullying,” the governor said the message was timely and significant, as it emphasizes the need to create safe, supportive, and inclusive environments for children both in schools and communities.

He stated that bullying in all forms — physical, verbal, emotional, or online — has no place in society, adding that the Edo State Government remains fully committed to protecting the rights and dignity of every child.

According to him, the administration will continue to strengthen policies and programmes that promote child protection, discipline, mutual respect, and positive learning environments across schools in the State.

The governor urged children to embrace kindness, compassion, teamwork, and respect for one another, stressing that true strength lies not in intimidation but in empathy, good character, and mutual understanding.