Know your new tax laws

ON June 26, 2025, President Bola Ahmed Tinubu signed a set of tax reform bills into law that will change how taxes are collected and paid in Nigeria. These reforms are designed to simplify the tax system, improve fairness, and enhance the efficiency of tax administration across the country. For many Nigerians, this is a welcome development that provides relief in a system that has long been seen as confusing and difficult to navigate. Here is what you need to know; the four (4) bills include the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Nigeria Tax Act combines several old tax laws into one simple law. In the past, the many different tax rules made it hard for taxpayers to understand what taxes they owed or how to pay. Now, unnecessary taxes have been removed, and paying multiple taxes on the same income or goods is no longer allowed. This makes it easier for people and businesses to know exactly what is expected of them. Tax collection across the country will now follow consistent rules. Whether you live in Lagos or anywhere else, tax officers are required to apply the same standards. This change prevents people from paying taxes more than once on the same thing or receiving conflicting instructions from federal, state, or local tax authorities.

An important feature of this act is the treatment of Value Added Tax (VAT). The VAT rate remains at 7.5 percent, but basic goods and services that Nigerians rely on, like food, healthcare, education, housing rent, and public transportation are exempted or zero-rated. This change is aimed at reducing the cost burden on Nigerians. The act also strengthens the input VAT system, allowing businesses to offset VAT paid on purchases, which prevents double taxation and encourages business growth. The act also mandates that all taxpayers, including people and businesses, obtain a Tax Identification Number (TIN). This unique number will help streamline tax registration, improve tracking of tax payments, and increase transparency and accountability. Nigeria Revenue Service (Establishment) Act replaces the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service. This new agency has a wider responsibility; it will collect all federal taxes as well as other government revenues like fees and levies. The agency will deploy improved technology platforms for taxpayers to register, file tax returns, and make payments quickly and without hassle. This modernization is expected to reduce delays, errors, and opportunities for corruption within tax collection. Joint Revenue Board (Establishment) Act creates a formal governance body to coordinate tax efforts among the federal, state, and local governments. This board promotes uniformity and consistency in tax policy and administration across the country by setting common and standardized practices for all tax authorities. This will help prevent conflicts and overlapping demands that have previously caused confusion and inconvenience. To protect taxpayers, this law also establishes a Tax Appeal Tribunal and an Office of the Tax Ombuds. These institutions give taxpayers channels to raise complaints, resolve disputes, and seek fairness in tax administration.

Additionally, the reforms introduce relief measures that benefit Nigerians directly. People earning up to 800,000 naira annually will be exempt from paying personal income tax. Small and medium-sized businesses with lower turnover thresholds will enjoy simplified tax compliance rules and reduced tax burdens. These measures aim to support growth and ease the pressure on small traders and entrepreneurs across the country. All these changes are set to take effect from January 1, 2026. This period before implementation allows the government to carry out awareness campaigns to educate Nigerians about the new tax laws. It also gives tax officials time to undergo training and prepare the necessary systems to ensure the transition to the new tax laws is smooth and efficient. Understanding these new laws is important for every Nigerian. It means knowing your rights, your responsibilities, and where to seek help if needed. The Renewed Hope Administration belongs to every Nigerian. The passing of these tax reform bills shows that our country is ready to embrace change. So, congratulations to all Nigerians for stepping into this new era. Together, we are building a Nigeria that works for everyone.

•Arabinrin Atoyebi is Technical Assistant on Broadcast Media to the Executive Chairman of the Federal Inland Revenue Service.

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