As the new Nigeria Tax Acts (NTA 2025) came into effect on January 1, 2026, it marked a historic overhaul of the country’s tax system. This is to simplify tax laws, improve revenue generation base, modernise administration, and encourage fair compliance. The new Acts also consolidate multiple fragmented tax laws into a more streamlined, coherent legislative framework. For taxation to work, citizens must believe that the system is fair, accountable, and beneficial. 

Taxes remain one of the main sources of income for nations globally. Many developed countries achieve tax-to-GDP ratios of 30% or more through efficient, well-administered tax systems and wide compliance. Nigerians must see through another lens that the Government is not out to punish citizens through the new NTA 2025, but to create a mix of revenue sources, a well-diversified tax mix that will help to manage economic cycles and reduce overdependence on any single revenue stream like oil.

Why the Nigerian Tax Acts matter

Taxes remain the backbone of every functional government. Globally, taxes fund education, healthcare, infrastructure, security, and social services. Countries with strong tax systems rely less on borrowing and are better able to plan for long-term development. Nigeria’s tax reforms are important because it is expected to:

1. Simplifies and clarifies overlapping tax law

In the past, Nigeria’s tax regime consisted of various overlapping laws governing different taxes (e.g., income tax, VAT, capital gains, excise duties). This policy stacks increased compliance costs, creates loopholes, and discourages voluntary tax compliance. The new Tax Acts replace these fragmented laws with a single, unified legal framework that is easier for taxpayers and administrators to understand and follow.

2. Enhancing Revenue Mobilisation and broadening the tax base

To regain and truly become the giant of Africa, Nigeria’s tax-to-GDP ratio must be enhanced, as Nigeria sits among the world’s lowest tax-to-GDP revenue (around 10.8%), forcing heavy reliance on borrowing and oil revenue. The new Tax Acts, if well administered, are expected to broaden the tax base and increase government revenues by modernising rates and closing loopholes. At this time, Nigeria needs a very solid and stronger revenue base to continue to fund essential public services such as healthcare, education, infrastructure, security, and social welfare. Without a robust tax system like this new NTA 2025, the development we all need might be hampered, and governments would continue to borrow more and increase debt burdens.

3. Supporting Economic Development

Nigerians must note that taxes are not just about revenue only, but they are also tools for shaping economic behaviour. With strategic tax incentives and exemptions for emerging and small businesses and critical sectors like health, education, and agriculture, in order to reduce the cost burden on key parts of the economy, encourage job creation, and support growth. 

4. Reducing Inequities

Interestingly, the new Acts introduce progressive tax structures and exemptions that protect lower-income earners while ensuring that larger, more profitable entities pay fairly. Creating a fairer system helps reduce inequality and builds trust between citizens and the state. There are more benefits to low-income earners in Nigeria than they think.

What Nigerians Complain About Most

Despite public engagements and efforts of this administration to educate citizens, many Nigerians appear unwilling to accept this new Act. Their concerns are consistent and deeply embedded in the pain points below:

1. Lack of Visible Benefits

The most common complaint is simple: “We don’t see the impact of our taxes.” This is associated with limited accessible roads, under-funded hospitals, overcrowded schools, and unreliable power supply, which makes citizens continue to question the value of paying taxes. When public services do not improve, taxation feels like a punishment rather than a voluntary obligation.

2. Corruption and Waste

Nigerians still have this belief that tax revenue is mismanaged. Many Nigerians feel they are funding politicians’ pockets rather than development. This perception alone is enough to discourage compliance.

3. Multiple and Complex Taxation

Small businesses regularly complain of being taxed by federal, state, and local authorities simultaneously. Informal levies, harassment by revenue agents, and unclear charges push many entrepreneurs into the informal economy.

4. Unfairness in the System

In practice, salary earners pay taxes automatically, while wealthy individuals and large corporations are often perceived to evade theirs. This imbalance breeds resentment and undermines voluntary compliance.

5. Poor Tax Education

Many citizens do not fully understand why they are taxed, how taxes are calculated, or what their rights are. Confusion creates suspicion, and suspicion discourages cooperation.

Global Best Practices in Tax Policy and Administration

For this Act to thrive and meet the expected outcomes. As governments continue to partner with countries that have success stories about tax reform globally. Our learning must be more genuine, intentional, and focused on these key areas.

1. Empowering Revenue Services (NRS) employees and Adopt Integrated Digital Tax Systems

Taking into consideration that advanced tax agencies like the United States of America Internal Revenue Service and Canada Revenue Agency are adopting digital tools, AI-powered support, automated noncompliance detection, e-filing, and real-time analytics to boost efficiency and transparency. Nigeria must reduce manual filing and incentivise electronic filing to reduce paperwork, speed up notice of assessment generation, and limit revenue losses. 

2. Broaden Tax Base with Fair Rates

Globally Countries with sustainable revenue systems strike a balance between broad tax exposure and fair rates. Specifically, G20 nations are implementing minimum corporate tax standards to reduce profit shifting by multinational companies. This helps ensure that all entities contribute their share to the countries where they do business, rather than where they declare their profits. 

3. Single Unified Administration

As this Act aligns with the global best practice, looking at other jurisdictions, a single, autonomous revenue authority manages all major tax types. This reduces duplication, increases accountability, and improves taxpayer service quality. This is a model Nigeria is pursuing by establishing the NRS to replace the older agency. 

4. Transparency and Accountability

The new NRS must commit and demonstrate the best-practice. Nigerians expect governments to publish regular data on tax collections, expenditures, and compliance performance. This builds trust and allows citizens to see how their tax money supports public services.

What Nigeria’s Government Must Do Next

1. Increase the human capacity of NRS and other associated agencies (if any). This can be achieved by training and investing in digital platforms for administering electronic filing and payment to reduce leakages and compliance costs. The NRS must be fully operationalised with clear performance benchmarks and strong safeguards against corruption and political meddling.

2. Ensure Transparency and Accountability. NRS, with the Ministry of Finance, must continue to publish regular reports on tax collections, allocations, and expenditures. The Ministry of Finance must also establish independent audit units and a public tax-expenditure database to monitor how tax revenues are spent.

3. Promote Civic Engagement. The pushback from citizens shows that the engagement is not enough. The government must launch public education campaigns that explain why taxes matter and how funds are to be used. Government can invest in tax applications to make tax filing, information, and data accessible online so citizens can track, make use of needed information, as well as accessing real time information on how revenue supports infrastructure and services.

4. Minimise Corruption and Leakages. The government must enforce stiff penalties for tax fraud and embezzlement by employees or any agencies that are found manipulating the system. The era of backdoor tax clearance should be over. The government must follow through to deploy technologies for e-invoicing and digital receipts to reduce cash-based leakages.

5. Implement a robust transitional guidance, which can be achieved by issuing clear implementation regulations and timelines for major provisions like the Economic Development Tax Incentive, Controlled Foreign Company rules, and Global Minimum Tax. The government should also consider grace periods or phased rollouts for complex compliance requirements like e-invoicing, digital filing, and presumptive taxation threshold.

Government MUST Build Public Confidence and Encourage Compliance by:

1. Demonstrating Tangible Benefits

As the Government continues to focus on modern day Infrastructure, citizens will see that tax money funds real improvements like rail, roads, hospitals, schools, and they will feel more motivated to comply.

2. Showing Fair Treatment

As we navigate the new tax era, the government must ensure that all sectors, including large corporations and foreign-owned, politically exposed owed companies pay appropriate taxes. Tax fairness fosters a sense of shared responsibility. Showing Nigerians the tax scorecard will enhance self-compliance.

3. Embracing Incentives for Compliance

Incentive is one of the most effective policy tools to achieve expected outcomes. This administration should introduce reward systems for timely filing and accurate tax payment, especially for small businesses and middle-income earners. This can encourage self-compliance and reduce the cost of tax administration.

4. Adopting Transparent Communication

As needed and more than before, we must provide regular updates for the public on how revenue targets are progressing for each fiscal year, if possible, how these funds are shared among all the levels of the Government and the Projects that are to be funded by tax revenue. This encourages the sense of direction and enables the citizens to jointly track the progress and where the taxes are expended.

Conclusion

This reform is long overdue, and it is a critical step toward fiscal sustainability, economic growth, and improved governance. Nigeria now plays a vital role in the global space and must align with global best practices, including tax digital administration, integrated tax agencies, transparent reporting, and fair tax structures. 

It is time to flex our capacity so that Nigeria can build a tax system that not only raises revenue but also earns the confidence and participation of its citizens. We still need strong implementation strategies, including public education and accountable governance, to enable Nigerians to embrace these reforms and help transform our country’s economic future.

Nigeria’s Tax Acts can succeed if they go beyond legislation and address the fundamental concerns of citizens. Nigerians are not entirely against paying taxes; they are against perceived waste, corruption, unfairness, and the invisibility of results.

By building trust, improving accountability, and delivering tangible public benefits, taxation can shift from being seen as a burden to becoming a shared responsibility for national development.

Government must continue to address policy blind spots, such as KPMG’s observations on technical ambiguities in the Nigeria Tax Act, while affirming that the reforms are sound, and any gaps can be clarified through guidelines or future amendments.

Olakunle Elatuyi, MPA, is a Public Administrator and Advocate for Integrated National and Subnational Policy.