On the 26th of June, 2025, Nigeria heralded new tax bills signed into laws targeted at driving economic growth and bringing an overhaul change to the taxation system in Nigeria. These laws include the Nigeria Tax Act, the Joint Revenue Board (Establishment) Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act. The advent of these new sets of tax laws was met with an avalanche of positive feedback from the public, particularly small and medium-scale enterprise owners, salary earners, companies, investors, and key stakeholders, despite facing heated clap-backs and arguments among some members of the political class of the society. Serving as a key component of President Bola Ahmed Tinubu’s fiscal reform agenda, these laws seek to provide a unified fiscal legislation and administrative system for governing taxation in Nigeria. Additionally, simplify compliance and reduce ambiguities for taxpayers thereby promoting national growth and development. This article offers an in-depth examination of Nigeria’s new tax laws, focusing on its major reforms and core provisions.
MAJOR REFORMS MADE BY NIGERIA’S NEW TAX LAWS
- Exemption from PAYE for low-income earners
Updated personal income tax rates and brackets have been introduced, exempting individuals earning below the minimum wage from personal income tax. Meanwhile, those with annual earnings of approximately N50 million or more are expected to face progressively higher tax rates.[1]
2. New Tax Rates for Companies
The new tax law affords small companies a 0% tax levy on their total profits. In other words, from the 1st of January 2026, small companies will be exempted from tax while other companies, medium and large, are to be taxed 30% on all their profits[2].
3. Introduction of 4% Development Levy
A development levy of 4% has been introduced and imposed on the profits of all companies resident in Nigeria except small companies and non-resident companies. This is to eradicate the burden of interfacing with multiple government agencies and to replace the tertiary education tax and various other levies[3]. It must be noted that this levy will not be levied on gains or profits of a company computed for hydrocarbon tax.[4] The levy is now to be distributed as follows;
- Tertiary Education Trust Fund – 50%
- Nigerian Education loan – 15%
- Nigeria Information Technology Development Fund – 8%
- National Agency for Science and Engineering Infrastructure – 8%
- National Board for Technological Incubation- 4%
- Defence and Security Infrastructure Fund – 10% and
- National Cybersecurity Fund – 5%
4. Capital Gains Tax for Individuals and Companies
Capital gains will now be taxed at the same rate as an individual’s overall taxable profits. Previously, capital gains were taxed at a flat rate of 10%, while corporate income tax stayed at 30%.[5]Companies, other than small companies, will now be taxed at an increased rate of 30% for CGT bringing it in line with the corporate income tax.
5. Imposition of Stamp Duty on Loan Capital of Companies
Stamp duty shall now be imposed on the loan capital of a company formed in Nigeria together with an ad valorem duty[6]. The loan capital of a company that does not qualify for stamp duty includes: an overdraft, a loan obtained for a period not exceeding 12 months, and a loan obtained for disbursement to a person in a lending arrangement.[7]
6. Introduction of Economic Development Tax Incentive for Priority Sectors
A company that falls in any of the sectors listed in the Tenth Schedule of the Nigeria Tax Act can apply to enjoy an economic development tax incentive. To qualify, an application may be made by a company incorporated in Nigeria, companies exempted from incorporation, or by promoters of a company yet to be registered to the Executive Secretary of the NIPC in the prescribed form.[8]It must be noted that a company granted an economic development tax credit is restricted from benefiting from a similar tax incentive[9]
7. Exemption from Stamp Duty
Electronic transfer of monies below N10,000 or its equivalent in foreign currency, transfers for salary payment, and intra-bank self-transfers are exempted from stamp duty.[10]
8. Exemption from VAT
The new Tax Act levies a 0% VAT rate on certain supplies such as basic food items, all medical and pharmaceutical products including medicinal herbal products, educational books and materials, fertilizers, locally produced agricultural chemicals, veterinary medicine and animal feeds, live cattle, goats, sheep and poultry, school fees, electricity bills, medical services, exported goods and services, medical equipment and electrical vehicles[11]
9. Exemption from Income Tax
The Nigeria Tax Act 2025 has exempted certain persons from income tax. These persons include
- Government Bodies: Federal, State, and Local Governments (including their departments and agencies) are not taxed on income earned in the course of their official duties.
- Friendly and Cooperative Societies: Profits made by registered friendly societies or cooperative societies so long as those profits aren’t from commercial businesses are not taxable.
- Religious, Educational, or Charitable Organisations
- Trade Unions: Registered unions are exempt from tax on income not derived from a business venture.
- Real Estate Investment Companies: These companies can enjoy tax exemptions on dividends and rental income but only if at least 75% of that income is shared with shareholders within 12 months. However, they are still taxed on management fees or other income made for their benefit.
- Pensions, gratuities, death benefits, and compensation for injuries or loss of employment are not taxed.
- Salaries of military personnel, especially those serving in combat zones.
10. Repeal of the Federal Inland Revenue Service
The FIRS Act has been repealed, and in its place, the Nigeria Revenue Service (NRS) has been established. The new agency operates with greater independence, has performance-based leadership appointments, and is subject to clearly defined oversight. The Act, Nigeria Revenue Service Act, also spells out its roles, powers, and internal structure.[12]
11. Issuance of Tax ID Suo Moto by the Nigeria Revenue Service
The Nigeria Revenue Service reserves the right to suo moto issue a taxable person with tax ID where such a person fails to apply for one[13]
12. VAT Distribution Formula for Government
The NRS Act has introduced a new VAT distribution formula for the government, which distribution will be as follows: 10% for the federal government, 55% for the State government, and 35% for the local government.[14]
13. Introduction of Tax Ombudsman and Tribunal
Another interesting reform made by the new tax laws is the introduction of the Tax Appeal Tribunal also known as the Tribunal, which is saddled with the responsibility of settling any tax disputes arising from the administration of the new tax laws and tax laws of both the national assembly and state houses of assembly.[15] Also, the Act has introduced the office of the Tax Ombuds to receive and investigate complaints on the actions of tax authorities, tax levies, sensitive members on their tax rights, and all other functions listed in the laws.[16]
CONCLUSION
Nigeria’s new tax laws mark a significant shift toward a more structured, transparent, and business-friendly tax system. With digital reforms, simplified compliance processes, and clearer oversight mechanisms, the laws are designed to close loopholes, boost government revenue, and ease the burden on honest taxpayers especially small businesses. Whether you’re an individual, entrepreneur, or corporate entity, understanding these changes is crucial for laying compliant and making informed financial decisions. As the tax landscape evolves, one thing is clear: accountability, transparency, efficiency, and fairness are now at the heart of Nigeria’s tax administration.
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[1] Section 58 Nigeria Tax Act 2025
[2] Section 56 Nigeria Tax Act 2025
[3] Section 59 Nigeria Tax Act 2025
[4] Section 59 (4)
[5] Section 22 of the First Schedule of the Nigeria Tax Act 2025
[6] Section 137 (1) Nigeria Tax Act 2025
[7] Section 137 (2) Nigeria Tax Act 2025
[8] Section 167 NTA 2025
[9] Section 183 NTA 2025
[10] Section 185 (i)
[11] Section 187 NTA 2025
[12] https://1stattorneys.com/articles/2025/06/28/the-nigerian-2025-tax-reform-acts-legal-review-and-implications-for-stakeholders/?utm_source=chatgpt.com
[13] Section 7(2) & (3) Nigeria Revenue Service Act 2025
[14] S 81 NRS 2025
[15] Section 23 Joint Revenue Board (Establishment) Act 2025
[16] Section 41 Joint Revenue Board (Establishment) Act 2025
