Tax expert gives condition for success of new tax laws

The Managing Partner, Olayinka Oyebola & Co, Olayinka Oyebola, has submitted that the success of the new tax laws would depend on its implementation and public acceptance in the years ahead.

He described the laws as a paradigm shift, with significant implications for individuals and businesses alike.

Oyebola noted that the reforms are aimed at promoting fairness, growth, and stricter compliance.

The tax expert said Nigeria unveiling the historic tax overhaul with the introduction of four new tax acts that will fundamentally reshape the country’s fiscal landscape from 2026 onwards.

He gave the explanations at a one-day seminar on “The New Tax Law (Implication & Compliance Requirements),” with the aim of providing clarity to its clients on the intricacies of the tax law

He, however warned that for the unprepared, there will be significant compliance risks and financial penalties, while the proactive can leverage substantial reliefs and strategic opportunities.

He identified the need for public enlightenment and engagement with tax practitioners to manage the challenge of misinformation, stressing that the goal is to build a tax system that citizens and businesses can understand and trust, one that reliably funds public services without stifling enterprise.

Addressing participants, Oyebola said the reforms introduced a new tax authority, the Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS), noting that the NRS was designed to enhance professionalism and efficiency in tax collection.

He added that State Internal Revenue Services will now operate with greater autonomy, and new institutions like an independent Tax Ombud and a strengthened Tax Appeal Tribunal will be established to improve taxpayer recourse and dispute resolution.

He warned individuals and corporate organisation, that the government will enforce mandatory registration and universal use of a Tax Identification Number (Tax ID), with penalties for non-compliance.

The Tax Clearance Certificate (TCC), according to him will become indispensable for accessing government services and commercial transactions, adding that small companies with an annual turnover not exceeding N100 million will benefit from enhanced tax reliefs, while larger companies will face a consolidated four percent development levy.

He added that the reforms also affect investments and mergers, with the Capital Gains Tax for companies raised to 30 percent and its net widened to include indirect share transfers, digital assets, and intangible property.

He said, “However, protective measures like reinvestment reliefs have been introduced to soften the impact. The Personal Income Tax regime has been redesigned with progressivity at its core, with a new exemption threshold meaning individuals earning N800,000 or less per year will pay no income tax.

“The standard Value-Added Tax rate remains unchanged at 7.5 percent, but with critical operational revisions, including the phased introduction of mandatory e-invoicing and VAT fiscalisation.

“A revised VAT revenue sharing formula will see states and local governments receive a larger portion of the collected tax. A new five percent surcharge on fossil fuel products has been introduced, with explicit exemptions for fuels used in households and for clean energy.

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“The success of this ambitious overhaul will depend on its implementation and public acceptance in the years ahead. There is a need for public enlightenment and engagement with tax practitioners to manage the challenge of misinformation. The goal is to build a tax system that citizens and businesses can understand and trust, one that reliably funds public services without stifling enterprise.”

He said further, “A major shift towards digitisation will see the phased introduction of mandatory e-invoicing and VAT fiscalisation to curb evasion.

“In a nod to federalism, a revised VAT revenue sharing formula will see states and local governments receive a larger portion of the collected tax. Separately, a new five percent surcharge on fossil fuel products has been introduced, with explicit exemptions for fuels used in households and for clean energy.

“The reforms represent a fundamental pivot towards a transparent, technology-driven tax administration. While compliance burdens, particularly around reporting and disclosure, are set to increase, the government hopes the trade-off of greater clarity, substantial relief for the vulnerable, and improved inter-governmental coordination will foster a more buoyant and equitable economy.

“The goal is to build a tax system that citizens and businesses can understand and trust, one that reliably funds public services without stifling enterprise.”