By: Chioma Madonna Ndukwu
President Bola Tinubu has enacted four major tax reform laws, initiating a broad overhaul of Nigeria’s tax system aimed at simplifying administration, improving revenue collection, and reducing the burden on low-income earners and small businesses.
The new legislation—comprising the Nigeria Tax Law, Nigeria Tax Administration Law, Nigeria Revenue Service (Establishment) Law, and the Joint Revenue Board (Establishment) Law—seeks to harmonise tax policies across the country’s 36 states and address long-standing inefficiencies in the system.
Under the reforms, corporate tax has been cut from 30% to 25%, and small businesses with limited revenue are now exempt from paying company tax. The changes are part of efforts to raise Nigeria’s tax-to-GDP ratio, which currently stands at 13.5%, below the African average.
While the initial reform package included more drastic changes to revenue sharing between the federal government and states, those proposals were dropped after sparking controversy. The final version maintains the current structure but increases the share of value-added tax (VAT) revenues going to individual states.
The reforms also rename the federal tax authority to the Nigerian Revenue Service (NRS), enhancing its mandate to strengthen revenue generation and streamline tax collection.
Despite the ambition behind the reforms, some experts have raised concerns about the government’s ability to manage funds effectively, pointing to persistent issues of corruption and mismanagement. Others argue the measures could help improve fiscal governance, particularly at the local level, and make Nigeria more attractive to investors amid ongoing economic challenges.
