🇳🇬 Introduction
On 26 June 2025, President Bola Ahmed Tinubu signed four pivotal Tax Reform Bills into law. These comprise the Nigeria Tax Act (NTA), Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA). Collectively, they usher in a landmark overhaul of Nigeria’s tax regime. This post dives deep into the reforms, grouping insights by Act and highlighting impacts for individuals, businesses, and investors.
1. What the Four Acts Do
Nigeria Tax Act (NTA)
One-stop tax code: Replaces over 50 overlapping taxes with a streamlined, single legislation .
Small-business relief: Raises the tax-free turnover cap from ₦25M to ₦100M and fixed assets cap to ₦250M .
Capital Gains Tax (CGT):
For companies, CGT rises from 10% to 30%, aligning with CIT .
CGT now captures indirect share transfers via offshore intermediaries .
Development Levy: Introduces a 4% levy on company profits (excluding small businesses), replacing TET, IT, NASENI, and PTF levies .
Minimum Effective Tax Rate (ETR):
Multinationals (group turnover ≥ €750M) or Nigerian firms with turnover ≥ ₦50B face a 15% ETR .
Mirrors OECD’s Pillar II tax rules .
VAT modernization:
Rate stays at 7.5%, expanded to include services and fixed assets .
Essential items (food, healthcare, education, transport, rent) remain zero-rated .
Digital compliance: VAT e‑invoicing, fiscal devices, and a national single window will drive technology-backed compliance .
Tax Administration Act (NTAA)
Standardizes tax administration across federal, state, and local levels .
Strengthens taxpayer rights and dispute mechanisms via Tax Ombudsman and Tribunals .
Nigeria Revenue Service Act (NRSA)
Replaces the Federal Inland Revenue Service with an autonomous **Nigeria Revenue Service (NRS)** .
Empowers NRS to collect non‑tax revenue, with increased transparency and efficiency .
Joint Revenue Board Act (JRBA)
Facilitates cooperation between government tiers on revenue sharing .
Institutionalizes the Tax Appeal Tribunal and Ombudsman to enhance dispute resolution .
2. Timeline for Implementation
Effective date: 1 January 2026, allowing a six-month transition .
This will coincide with Nigeria’s fiscal year; preparatory steps include system upgrades, stakeholder training, and regulation drafting.
3. What This Means for Key Stakeholders
Stakeholder and Key Impacts:
Low‑income earners Higher personal tax-free threshold (₦800K/year vs ₦300K); progressive PIT rates from 15% to 25%
Employees Must now declare non-salary income annually; comprehensive tax filing required
Small businesses CIT/CGT exemption up to ₦100M turnover; simplified compliance and relief from nuisance taxes
Large businesses & MNEs 15% minimum ETR; 4% development levy; aged VAT recoverability; stricter penalties; e-invoicing
Free‑zone operators Exempt until ≥ 25% of domestic sales; full liability from 2028
All taxpayers Digital tax compliance; VAT including services; unified tax code; streamlined dispute resolution
4. Strategic To‑Dos for Your Business
1. Assess turnover/assets: Determine whether you qualify as a “small company.”
2. Tax modeling: Recalculate tax obligations under new CGT, ETR, and development levy.
3. Upgrade systems: Prepare ERP for VAT invoicing and e‑filing as mandated.
4. Employee awareness: Train HR/finance teams on new filing rules and obligations.
5. Cross-border planning: MNEs must address top-up tax risk due to global ETR rules.
6. Engage stakeholders: Coordinate with authorities ahead of Jan 2026 through advocacy and dialogue.
5. Broader Impacts & Considerations
Fiscal boost: Tax-to-GDP ratio expected to rise from ~10% toward the continent’s average of ~16–18% .
Economic growth: Streamlined taxes and improved compliance will stimulate business activity and foreign investment.
Equity & fairness: Relief for low-income households; higher burdens for luxury consumers and high earners .
Regional tensions: VAT sharing reform sparked north–south debates—30% cap on contribution-based allocation agreed to ease tensions .
6. Looking Ahead
Regulations ahead: Implementation will depend on detailed guidelines from NRS, NTAA, and Finance Ministry.
Enforcement ramp-up: Tax authorities are expected to issue new penalties and conduct compliance drives .
Stakeholder support: Continuous engagement through seminars, helplines, and guidance is essential.
✅ Conclusion
This tax reform package modernizes Nigeria’s fiscal landscape—simplifying laws, driving digitization, and promoting fairness. While it brings relief for the underprivileged and small businesses, larger firms must brace for tighter tax rules and compliance demands. With the effective date set for 1 January 2026, now is the time for individuals and businesses to adapt systems, review tax strategies, and engage proactively with authorities.
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