The New Tax Law in Nigeria

CO-WRITTEN WITH POPOOLA MARY 

On 26 June 2025, Nigerian President Bola Ahmed Tinubu signed into law four tax bills approved by the National Assembly. These bills are designed to promote and improve revenue generation while making Nigeria a more investor-friendly country.

These bills are:

● The Nigerian Tax Act

● The Nigerian Tax Administration Act

● The Nigerian Revenue Service (Establishment) Act

● The Joint Revenue Board (Establishment) Act

The essence of these tax laws is to simplify tax collection, reduce the tax burden on CAC-registered businesses, and transform Nigeria into a country that attracts more investment.

As passed by the lawmakers, the new Nigerian tax law took effect on 1 January 2026 and is now in full effect.

This article explores the four tax bills passed into law, highlighting the key factors you need to know.

The Nigerian Tax Act

The Nigerian Tax Act (NTA) outlines who is required to pay taxes and how they should be paid by different entities. Below is a detailed explanation of how these entities are expected to pay their taxes:

Tax Benefits for Small Businesses: According to the Nigerian Tax Act, any company with yearly revenue of less than 25 million Naira is classified as a small business. These companies will receive a reduced tax rate and may also qualify for a tax reduction or exemption, making it easier for them to reinvest in their businesses.

Implementation of the Development Tax Fee: This fee will be charged annually to individuals who earn above 800,000 Naira yearly. The charge is intended to contribute to the country's economic development in areas such as healthcare, education, and infrastructure.

Income Taxed Based on Earnings: Individuals with low incomes pay less tax, while those with higher earnings are taxed at a higher rate. This means that wealthier Nigerians, who earn more, will pay a higher percentage of their income in taxes.

Tax on Digital Assets: Individuals who earn income from digital assets, such as Bitcoin and Ethereum, will be taxed just like any other taxable income. The government now treats digital currencies the same way as regular income, with several rules that must be followed.

The Nigerian Tax Administration Act (NTAA)

The Nigerian Tax Administration Act governs the rules for how taxes are collected and managed. Here’s a breakdown of how it works:

Mandatory Registration for Tax ID (TIN): To be identified by the government for tax filing and compliance purposes, business owners or income earners in Nigeria must register for a Taxpayer Identification Number (TIN). The TIN serves as a means of identification for tax purposes and is used to track tax payments.

Monthly Tax Report Requirement: The government has made it mandatory for businesses and companies to submit a tax report to the authorities at the end of every month, making it easier for the government to monitor compliance.

Digitalized Tax Filing and Compliance Processes: Individuals and business owners can now comfortably pay their taxes digitally through the government's online tax system, without the need for paperwork.

Submission of Returns by Virtual Asset Service Providers: The new tax law mandates that individuals or businesses owning virtual assets, such as Bitcoin and Ethereum, submit monthly reports of their earnings, just like regular businesses.

Threshold Reporting for Transactions: Some businesses have a reporting limit for their transactions. This means that if a business exceeds its transaction threshold for the month or year, the details of the transaction must be reported to the tax authorities.

Modified VAT Allocation Formula: A modified formula has been put in place for how the Value Added Tax (VAT) is shared between the federal government and the states. The new formula ensures that the states receive a larger share of VAT revenue to help better fund local services.

The Nigerian Revenue Service (Establishment ) Act

This Nigeria Revenue Service(FIRS) replaces the old Federal inland Revenue service which aims at collecting federal tax, managing and accounting for government revenue, enforcing tax compliance and also working with international tax bodies. It strengthens revenue collection and reduces corruption and efficiency for the development and progress of the country. NRS is not limited to collection of federal tax alone, it protects taxpayer data with confidentiality, which means the amount of tax a business owner pays is not disclosed to the public and there is a a stipulated percentage for tax. A business owner who makes a profit of one hundred million naira will pay lesser tax than a business owner that earns two hundred million naira.

The
new
structure
affects
every
taxpayer,

from
small
 businesses
 and
individual
traders
to
multinational
 corporations
and
public
institutions.


The following are the key factors of NRS :

• NRS ensures that the
 Tax ID
of
 a
 person
 cannot
 be
 used
 or
 transferred
to
another.
• The Act mandates that the service account for all forms of revenue, not just tax revenue, accruing to the government.
• The Act assists in tax collection and administration at both domestic and international levels for a fee.
• The Act broadens the funding base by including all revenue collected, such as revenue from oil and gas, which was previously excluded.

The NRS shall be entitled to 4% of total revenue collected as petroleum royalty, aligning the system with global benchmarks and promoting greater cost efficiency.The service is also required to submit quarterly and annual reports on its activities, performance and financial statements to the National Assembly conservancy to a Nigerian local or state government. 

It also introduces a revenue claim which means any amount of tax, levy fees, charges or statutory contribution due or owed, including interest, administrative penalty and cost of collection to a Nigerian state or local government and their agency will be covered under the Act. 

The Joint Revenue Board

The Joint Revenue Board (JRB) is the new central body in Nigeria, established by the Joint Revenue Board of Nigeria (Establishment) Act, 2025, to harmonize and coordinate revenue administration across federal, state, and local government levels. It officially began operations on January 1, 2026.

The aim and objectives of JRB are:

Harmonization and Coordination: It provides a formal governance structure to facilitate cooperation and uniform compliance standards among revenue authorities.

National Taxpayer Database: The JRB maintains a national taxpayer identification database and has launched the Nigerian Tax ID Portal, which provides a unified means of identification for all taxpayers, linked to their National Identification Number (NIN) or Corporate Affairs Commission (CAC) registration number. The new Tax ID replaces any previously issued TIN.

Abolition of Illegal Levies: The JRB has banned the collection of road taxes, levies, and related charges through checkpoints and the use of road stickers by state and non-state actors to improve the ease of doing business and eliminate extortion.

Conclusion 

The new tax law in Nigeria adopts a comprehensive approach to revenue mobilization by accounting for all forms of government revenue, not just traditional taxation. Its primary objective is to strengthen public finances through more efficient tax collection while also enhancing revenue generation for both the federal and state governments through the establishment of a centralized coordinating body. This centralized framework is expected to reduce leakages, improve accountability, and ensure a more equitable distribution of resources across all levels of government. Ultimately, the increased and better-managed revenue will provide stronger financial support for critical sectors such as power, telecommunications, healthcare, and education, thereby promoting sustainable economic growth and improving the overall standard of living for Nigerians.