By signing four major tax reform bills into law on Thursday, President Bola Ahmed Tinubu initiated one of the most significant overhauls of Nigeria’s fiscal landscape in decades. The signing ceremony at the Presidential Villa in Abuja drew the attendance of key government figures, including Senate President Godswill Akpabio, House Speaker Tajudeen Abbas, governors AbdulRahman AbdulRazaq of Kwara and Hope Uzodimma of Imo, as well as Finance Minister Wale Edun and Attorney-General Lateef Fagbemi.
According to a statement released by the presidency, the new laws are designed to consolidate Nigeria’s fragmented tax codes, streamline collection processes, and improve transparency.
“By reducing the multiplicity of taxes and eliminating duplication, the [Nigeria Tax] bill will enhance the ease of doing business, reduce taxpayer compliance burdens, and create a more predictable fiscal environment,” the statement noted.
The tax reform package includes a harmonised tax law to eliminate overlapping levies, a new legal framework to standardise administration across all levels of government, and the establishment of a more autonomous Nigeria Revenue Service (NRS) to replace the Federal Inland Revenue Service (FIRS). A Joint Revenue Board has also been created to coordinate efforts between the federal and state governments, alongside the formation of a Tax Appeal Tribunal and an Office of the Tax Ombudsman to resolve disputes.
Federal authorities have expressed confidence that these reforms will transform the country’s tax system and improve both compliance and revenue generation. The bills, first presented to the National Assembly in October 2024, passed through legislative approval by May 2025 and were signed into law by the President on June 26, 2025. They are set to take effect from January 1, 2026.
For ordinary Nigerians, especially small business owners and wage earners, the impact of these reforms is expected to be profound. Small businesses with an annual turnover below ₦50 million will now be exempt from company income tax. This is expected to ease the burden on microenterprises, which form the backbone of Nigeria’s informal economy.
Personal income tax exemptions have also been extended to workers earning the national minimum wage, a move lawmakers said was meant “to ease the tax burden on lower-income earners.”
Previously, the tax code had become so convoluted that many Nigerians, particularly those operating in the informal sector, found themselves paying numerous arbitrary levies. As an editorial from a popular Nigerian news media pointed out, it was not uncommon for small traders to be subjected to what it described as “nuisance taxes” at markets and motor parks. With the new system, those informal traders may benefit from clearer regulations and a reduction in exploitative collections.
The reforms also extend into Nigeria’s rapidly growing digital economy. The legislation introduces incentives for tech startups and online businesses, which are expected to benefit from tax breaks and simplified compliance frameworks. “The tax reform bills offer incentives for players in the digital economy and start-ups,” Punch noted.
This is seen as a strategic move to support innovation while also gradually integrating digital commerce into the formal tax net.
However, the government also aims to expand coverage of the informal economy, not through coercion, but by making tax compliance more attractive. Analysts believe that a simplified system with selective exemptions and transparent procedures will encourage many informal businesses to formalise, helping to broaden the country’s tax base.
Changes have also been made to the country’s revenue-sharing model, particularly concerning value-added tax (VAT). Under the new arrangement, states will retain 30% of the VAT generated within their borders, while another 50% will be pooled and distributed equally among all states. The remaining 20% will be allocated based on population. This reform is designed to incentivise states to support economic activity and improve tax collection efforts within their jurisdictions.
President Tinubu has described the reforms as a defining moment in Nigeria’s economic trajectory. “The way forward for our country’s prosperity,” he said, “is to create a fair, effective, and unified tax system that supports growth.”
On his verified social media account, the President declared, “Nigeria is ready and open for business, and this time, everyone has a fair shot.” He described the former tax system as “a patchwork, complex, inequitable, and burdensome,” and promised, “That era ends today.”
He also emphasised the human-centred aspect of the laws, calling them “some of the most significant tax reliefs in a generation targeted at low-income earners, small businesses, and working-class families.”
The legislative arm was equally optimistic. Senate President Godswill Akpabio called the legislation a tool that would “add immense value to governance and transform the way taxes are collected and distributed in Nigeria.” He praised his colleagues for their role in refining the bills, saying the outcome would “revolutionise tax administration” and become “a law that would last for generations to come.”
Taiwo Oyedele, chair of the presidential committee that designed the reforms, applauded the President’s leadership and predicted that history would remember Tinubu for having the courage to implement such bold fiscal changes. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service, described the day of the bill signing as “the happiest day of my life,” calling the reforms the realisation of a long-held dream.
For context, Nigeria’s current tax-to-GDP ratio stands at just 10.8%, well below the continental average. President Tinubu has stated a target of raising this to 18% in the medium term. Officials argue that by widening the base, easing compliance, and protecting low-income earners, Nigeria can raise the revenue it needs to fund infrastructure, education, and healthcare, without increasing the burden on the majority of its people.
The new system may not fix all problems overnight, but it signals a significant shift toward a more predictable, equitable, and accountable approach to public finance. For millions of Nigerians, from roadside traders to tech founders, this reform may well shape how they earn, spend, and contribute to the country’s future.