Confusion Over Implementation of the New Tax Laws

NIGERIA - Confusion Over Implementation of the New Tax Laws

Nigeria’s ambitious tax reforms, intended to simplify and modernize the fiscal system, have instead sparked widespread confusion and controversy across government, business, and civil society.

The Nigerian government introduced the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service Act (NRSA), and the Joint Revenue Board Act (JRBA) in June 2025, with implementation beginning in January 2026.

These laws were designed to consolidate over sixty disparate taxes into fewer than ten streamlined statutes, aiming to reduce inefficiencies, curb evasion, and align Nigeria’s tax regime with international best practices.

The reforms promised fairness, competitiveness, and relief for low-income earners, including exemptions for individuals earning ₦800,000 or less annually. Yet, despite these intentions, the rollout has been fraught with uncertainty and disputes.

One major source of confusion stems from discrepancies between the harmonized bills passed by the National Assembly and the gazetted Acts released by the Presidency. Stakeholders, including professional services firms such as KPMG, have flagged inconsistencies, gaps, and omissions in the legislation.

Concerns range from the taxation of shares and dividends to obligations for non-resident companies and foreign exchange deductions. These ambiguities have left businesses unsure of compliance requirements, while taxpayers fear unintended liabilities.

Political scientists and civil society groups have criticized the government’s approach, arguing that implementation has been rushed without adequate oversight or transparency.

The Nigeria Political Scientists Association warned that the reforms risk perpetuating multiple taxation, a longstanding problem in the country, and could create avenues for unaccountable governance. They argue that warehousing collections in already overburdened institutions may exacerbate inefficiencies rather than resolve them.

The controversy also highlights Nigeria’s broader governance challenges. Legislative processes have proven slow and contentious, while executive actions have been criticized for lacking clarity.

President Bola Ahmed Tinubu’s administration faces accusations of prioritizing revenue generation over citizen welfare, with critics suggesting that the reforms were more politically expedient than economically sound. The debate underscores the tension between Nigeria’s urgent need for fiscal stability and the risks of poorly coordinated policy execution.

In practice, businesses are struggling to interpret the new framework, while ordinary Nigerians remain skeptical of its fairness.

Although the government insists the reforms will stimulate growth and protect vulnerable groups, the lack of clear guidelines has fueled mistrust. The situation has forced professional bodies, including accounting firms and trade associations, to step in and provide clarifications, yet even these efforts have not fully resolved the confusion.

Ultimately, Nigeria’s new tax laws represent both a bold attempt at modernization and a cautionary tale of reform without consensus.

Unless the government addresses the inconsistencies, improves transparency, and engages stakeholders more effectively, the reforms risk undermining confidence in the tax system and stalling the very economic growth they were meant to encourage.