FG gazettes new tax reform laws

Nigeria's President, Bola Ahmed Tinubu

-SEB EDITORIAL-

Nigeria’s Tax Reform: A New Dawn or Another Mirage?

The official gazetting of Nigeria’s new tax reform laws marks a pivotal moment in the country’s economic narrative.

For decades, Nigeria has grappled with a convoluted tax system, a narrow revenue base, and a tax-to-GDP ratio that lags behind continental peers. Now, with the publication of four consolidated laws, the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act, the Tinubu administration is signaling its intent to rewrite the fiscal playbook.

At the heart of these reforms is a bold ambition: to simplify taxation, broaden the base, and stimulate growth without stifling enterprise. Small businesses, long burdened by compliance costs and opaque regulations, are now exempt from corporate tax if their turnover falls below ₦100 million and their fixed assets are under ₦250 million. This is not just a tax break, it’s a philosophical shift toward nurturing grassroots entrepreneurship. For larger corporations, the possibility of reducing the corporate tax rate from 30% to 25% introduces a competitive edge, though it remains contingent on executive discretion.

The reforms also introduce a top-up tax regime for high-revenue entities, with thresholds set at ₦50 billion for domestic firms and €750 million for multinationals. This move attempts to strike a balance between equity and efficiency, ensuring that the most profitable entities contribute their fair share without discouraging investment.

Meanwhile, the introduction of a 5% annual tax credit for qualifying projects in priority sectors is a strategic nudge toward industrial diversification and infrastructure development.

But beyond the numbers, the real test lies in implementation. The phased rollout, immediate effect for the revenue service and joint board laws, and a January 2026 start for the tax and administration acts, offers breathing room. Yet, it also demands meticulous coordination across federal and state agencies, many of which have historically operated in silos. The success of these reforms will hinge on political will, institutional capacity, and public trust.

Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has framed the reforms as a departure from colonial-era tax structures and a leap toward a modern, transparent system. His optimism is not unfounded. Nigeria’s tax gap, estimated at 70%, is a gaping hole that these laws aim to plug.

But optimism must be tempered with realism. Without robust enforcement, digital infrastructure, and civic education, even the most elegant laws risk becoming paper tigers.

In the end, the gazetting of these reforms is more than a bureaucratic milestone. It is a statement of intent, a challenge to the status quo, and a call to action.

Whether it becomes a turning point or another missed opportunity will depend not just on the laws themselves, but on the courage to enforce them and the wisdom to adapt them to Nigeria’s complex realities.