HOW THE NEW TAX LAW AFFECTS YOU IN 2026

On 26 June 2025, President Bola Tinubu signed four major tax-reform bills into law: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025, and the Joint Revenue Board (Establishment) Act 2025. Together, they replace and consolidate most existing tax laws (covering companies, income tax, capital gains, VAT, stamp duties, etc.) under a unified, modern regime. The new laws are scheduled to take effect on 1 January 2026. In this article, we will explore the implications of these new tax laws for both individuals and businesses.

WHAT IS THE NEW TAX LAW IN NIGERIA?

We cannot discuss the current tax reforms in Nigeria without making reference to the four tax laws cited earlier. Each of these laws explains the what, who and how of taxes in the wake of these reforms. We will therefore explain them briefly and in simple terms.

1. The Nigeria Tax Act 2025(the WHAT): The Nigeria Tax Act repeals all existing tax laws and consolidates them into a legal tax framework. It also provides payable taxes and categorises them. E.g: Taxes on transactions such as Value Added Tax (VAT), Taxes on assets and Financial Instruments such as Capital Gains Tax Act.
2. The Nigeria Tax Administration Act (the HOW): This prescribes how taxes will be collected and accounted for in all three tiers of government (Federal, State and Local).
3. The Joint Revenue Board (Establishment) Act (the WHO): Replaces the Joint Tax Board with the Joint Revenue Board. The later is established to harmonise, coordinate and settle disputes from revenue administration in Nigeria. It also establishes mechanisms to protect taxpayers. E.g establishing the Tax Ombud and Tax Appeal Tribunal.
4. The Nigeria Revenue Service (Establishment) Act: Replaces the Federal Inland Revenue Service with a modernized and digitized revenue service. The Act, in addition, sets up collaboration framework amongst revenue agencies.

HOW THE NEW TAX LAWS AFFECT YOU IN 2026 AND BEYOND

1. Tax compliance is no longer an option, but a mandatory requirement
2. Need for structured businesses as unstructured businesses will suffer a lot. By “structured businesses”, we mean businesses that with established operating systems that run independently from their founders. As a business owner, consider structuring your business in recruitment, pricing and financial management, operations, etc
3. Filing and remitting of taxes will be more digitized. This has already been in operation with the TaxPro Max regime. However, we hope to see a more robust digitised framework in terms of tax compliance in the near future. What this means is that the declaration of tax returns will no longer be at the taxpayer’s discretion.
4. There will be strict compliance requirements. Tax evasion will become more difficult and expensive
5. Mandatory VAT (Value Added Tax) e-invoicing. All registered businesses must adopt e-invoicing and real-time VAT systems aligned with the Nigeria Revenue Service (formerly FIRS) technology protocols. In simple terms, if you raise an invoice for a client in your business, you’ll be required to raise it on the FIRS/NRS invoice platform. This has kicked off already with large companies test running the platform.
6. Changes in Personal Income Tax PIT) rate. PIT rates now range from 0% to 25%. Individuals earning N800,000 (eight hundred thousand naira) or less annually are fully exempt from PIT unlike the previous N300,000 exemption.
7. For entities registered as Limited Liability Companies, small businesses will be required to pay less taxes, while large companies may be required to pay more. Companies with an annual turnover of N100,000,000 (one hundred million naira) and below will pay 0% Company Income Tax. While others above N100,000,000 (one hundred million) will be required to pay 30% Company Income Tax.
8. Enhanced VAT rules. VAT remains 7.5% of sales. Essential such as food, education, medicine/healthcare are zero rated. Transport and housing allowance are VAT exempt. In addition, late filing is high and now attracts N100,000 (One hundred thousand naira) penalty and N50,000 (fifty thousand naira) for each subsequent month.

CONCLUSION

A critical study of the new tax laws highlights the fact that although there are minor change in tax rates, the tax reforms/changes is primarily focused on enforcement and compliance as against creating new taxes. The tax reform also aims to simplify tax administration, broaden the base, and make taxation more transparent and equitable.

While we wait to see the implementation of the agenda unfold, it is our hope that readers position themselves towards beign on the right side of the law in this regard.

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