By Chinedu Okafor, Nigerian CEO Magazine
In a wide-ranging conversation, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, sheds light on Nigeria’s new tax laws set to take effect in January 2026. He explains how the reforms are designed to ease the burden on citizens, empower small businesses, and modernize the country’s fiscal framework.
Making the Tax System Work for Growth
Oyedele emphasizes that the core objective of the reforms is to make Nigeria’s tax system fairer, simpler, and more growth-friendly. According to him, revenue generation should never come at the expense of citizens’ welfare or long-term development. The overhaul was necessary because Nigeria’s tax laws had become fragmented, outdated, and inefficient, creating barriers to growth.
Protecting Citizens from Higher Costs
Addressing fears that “tax reform” means higher costs, Oyedele clarifies that the new laws are designed to reduce the tax burden. Essential items such as food, healthcare, and education are exempt from VAT, shielding low-income households. Businesses can now claim input VAT more broadly, reducing hidden costs that previously inflated consumer prices.
Relief for Workers and Small Businesses
Workers earning up to ₦100,000 per month will now be exempt from income tax, ensuring that survival income is not taxed. For small businesses, the exemption threshold has been expanded to ₦100 million in annual turnover, covering over 90% of Nigerian enterprises. These businesses will enjoy relief from VAT, capital gains tax, and withholding tax, alongside protection from harassment through the newly established Office of the Tax Ombud.
Incentives for Growth and Job Creation
The reforms encourage reinvestment and hiring by offering extra deductions for businesses that have expanded their workforce in the past two years. Input VAT credits on assets and services will lower production costs, while harmonized tax administration reduces duplication and disputes, allowing businesses to focus on growth.
A Progressive System for Individuals
The Pay As You Earn (PAYE) system has been restructured to be more progressive. Lower-income earners are exempt, middle-income earners pay less, and only high-net-worth individuals face rates up to 25%. Oyedele notes that about 98% of Nigerian workers will pay either no tax or less tax under the new regime.
Tackling Multiple Taxation and Nuisance Levies
To address the long-standing issue of multiple taxation, the reforms introduce stronger coordination across federal and state levels through the Joint Revenue Board (JRB). Constitutional amendments are also being pursued to eliminate nuisance taxes entrenched in law.
Leveraging Technology for Transparency
Technology will play a central role in compliance, shifting enforcement from roadside harassment to digital systems. Measures include e-filing, e-payment, data matching, and risk-based audits, ensuring that enforcement targets genuine taxable capacity rather than petty traders.
Competitive Edge in Africa
Nigeria’s tax regime is now more competitive compared to peers. With VAT at 7.5% (lower than Ghana, Kenya, and South Africa) and corporate tax planned at 25%, Nigeria positions itself as a more attractive destination for investment. Small companies pay 0% corporate tax, a significant advantage over Kenya and Ghana where small firms pay turnover-based levies.
Building Trust Through Accountability
Oyedele acknowledges skepticism among Nigerians but insists that the reforms will only succeed if citizens see tangible benefits: relief for the poor, protection for small businesses, and transparent use of tax revenues. Public education campaigns will be critical to counter misinformation and ensure smooth implementation.
Final Word
“The true test of these reforms,” Oyedele concludes, “is whether the poor are allowed to breathe, small businesses stop being harassed, and taxpayers get clear rules with quick dispute resolution. Trust must be earned, and accountability will be the measure.”