President Bola Ahmed Tinubu has signed the new Tax Reform Bills into law, marking a major shift in Nigeria’s tax system.
Below is a simplified summary of the key changes and how they affect individuals, workers, and businesses across the country:
- FIRS Now NRS
The Federal Inland Revenue Service (FIRS) has been renamed to Nigeria Revenue Service (NRS). - Centralised Revenue Collection
The newly established NRS will now take over revenue collection duties from other agencies such as the Nigeria Customs Service, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Ports Authority (NPA), and Nigerian Maritime Administration and Safety Agency (NIMASA). - Tax Relief for Low-Income Earners
Nigerians earning ₦800,000 or less per year will no longer pay personal income tax. - Higher Tax Rate for High Earners
Individuals earning above ₦50 million annually will now be taxed at a rate of 25%. - Small Business Tax Exemption
Small business owners are fully exempted from paying income tax under the new law. - Reduced Company Income Tax from 2026
Starting in 2026, company income tax for medium and large businesses will be reduced from 30% to 25%. - VAT-Free Essential Goods and Services
Value Added Tax (VAT) will no longer apply to basic items such as food, school fees, medical services, pharmaceuticals, and electricity. - No Increase in VAT or Corporate Tax
The VAT rate remains at 7.5%, and there is no change to the current corporate income tax rate for now. - New Development Levy Introduced
A new Development Levy of 2% to 4% will be used to support national development agencies like NELFUND, TETFund, NITDA, and NASENI.
The Federal Government says this reform aims to ease the burden on low-income earners, support small businesses, and improve national revenue efficiency while still funding key development sectors.
