Fragmented, outdated, weakly enforced, and often misaligned with citizens’ expectations, Nigeria’s tax system has been a frequent target for criticism. However, with a tax-to-GDP ratio of approximately 6 per cent for many years and one of the lowest in the world, the Tinubu administration decided to take a bold step and signed four new tax reform bills into law on June 26, 2025.

The new laws – the Nigeria Revenue Service (Establishment) Act, the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Joint Revenue Board Act – mark a turning point in tax legislation, phasing out several outdated statutes. They introduce measures that build a more efficient, less complex, and more citizen-aligned system for tax governance in Nigeria. In what may be the most symbolic of the new tax laws, the FIRS will be known as the Nigeria Revenue Service (NRS).

However, the rebranding goes beyond just a name change; it represents a shift in institutional focus, strategic approach, and performance metrics as well.

Key features of these reforms include new reliefs for individuals and SMEs, a consolidated tax code, enforcement mechanisms, technology use, and a platform for intergovernmental coordination. Taxpayers can also expect to see independent adjudication and dispute resolution, which were conspicuously absent. This being said, when it comes to tax reform and, by extension, economic reform, policy is only half the battle. Between the policy ink and the implementation space are significant gaps.

In some cases, agencies are underfunded. In others, capacities are weak. In most cases, taxpayers are uninformed or misinformed. As a result, many reforms have stayed as mere entries in the gazette, gathering dust over the years.

This article provides a critical review of Nigeria’s new tax laws, highlighting key areas of concern, implications for businesses and citizens, and offers recommendations for action.

Background and evolution of Nigeria’s tax laws
Nigeria’s tax laws originated from a revenue system used by the colonial administration to collect customs, income, and property taxes. This laid the foundation for the existing tax system and structure. Over the years, the system has evolved into a complex, highly fragmented taxation ecosystem comprising over 50 federal enactments, resulting in overlaps and inefficiencies in tax administration (nesgroup.org).

Recent reforms in this area have been mainly incremental, but they have lacked coherence within the broader landscape. Beginning with the Finance Acts 2019 to 2023, the government introduced VAT adjustments, new excise duties, lower withholding taxes, NTDIS, and simplified voluntary tax payment requirements, such as digital tax registration, to drive compliance. Yet the legal framework continued to be disjointed and confusing for taxpayers, while the overall system still fell far short of revenue targets. Nigeria’s tax-to-GDP ratio is approximately 6 per cent, significantly lower than the rates achieved by other nations, which range from 15 per cent to 18 per cent.

The new tax reform package, as detailed in the four integrated Acts, seeks to address historical weaknesses and simplify and streamline the tax law. It builds enforcement capacity, establishes new governance structures, and embarks on institutional reforms through the NRSA. In many ways, the Acts represent a significant paradigm shift from incremental reform to comprehensive transformation.
Key features of the new tax laws

3i. Institutional rebranding: From FIRS to NRS
The Nigeria Revenue Service (Establishment) Act, 2025 repeals the Federal Inland Revenue Service Act of 2007, establishing a federal tax agency with autonomy and authority to “exercise control, supervision and regulatory oversight of all Federal Taxes and certain non–tax revenues collected on behalf of the Federal Government” (nesgroup.org). The NRS is responsible for FIRS’s functions and cases as well as its assets and officers. It has complete jurisdiction over FIRS mandates, with a view to transforming the existing system into one with a high level of transparency and accountability, as well as improving service delivery for taxpayers.

3ii. Unified tax legislation
The Nigerian Tax Act, 2025 consolidates all taxes previously governed by old laws into a single tax code, including PIT, CIT, CGT, VAT, Stamp Duties, and new Development levies (nesgroup.org). The Nigerian Tax Act also updates the minimum tax regime and eliminates overlapping and duplicative taxes, streamlining tax compliance and reducing bureaucracy.

3iii. Governance and dispute mechanisms
The Joint Revenue Board Act provides for the establishment of the Joint Revenue Board (JRB) to coordinate tax administration and harmonise policies between Nigeria’s three tiers of government (federal, state, and local). It ensures collaboration in setting rates, sharing taxpayer information and other tax data, and facilitating overall tax policy (nesgroup.org). The reforms also establish a zonal Tax Appeal Tribunal as well as a Tax Ombud and an independent Office of the Tax Ombud (OTO) to provide independent oversight and effective ADR for tax disputes (nesgroup.org).

3iv. Progressive tax incentives
All individuals earning up to N800,000 (N800,000) per annum are exempt from paying tax. Additionally, a 20 per cent deduction is applied to rent paid up to N500,000 (N 500,000). (nesgroup.org)

Small companies with a turnover of not more than N100 million and fixed assets not exceeding N250 million in any financial year are exempted from CIT, CGT, and Development Levy. (pwc.com)

Corporate income tax rates are to be reduced gradually from 30 per cent to 25 per cent. In contrast, effective tax minimums are updated, capital gains rates are aligned, and sector-specific levies are consolidated to improve competitiveness.

3v. VAT and fiscal system overhaul
Nigeria maintains a VAT rate of 7.5 per cent but now introduces zero-rating on essentials, including food, pharmaceuticals, and medical devices, which allows for a claim for input credit (pwc.com). Nigeria also introduces VAT fiscalisation and e-invoicing, making Nigeria part of a growing list of countries moving towards electronic tax in both VAT and sales tax (pwc.com).

Policy–implementation baps
The small details and operational nuances of implementation can still undermine the most finely crafted legislation. These are often “the gaps” between policy and practice. Despite the detail and thoroughness with which Nigeria’s new tax laws were articulated, there are several weak links and bridges that remain unbuilt. These pose real risks to the ambitious, positive impact and implementation laid out in the Acts:

4i.Constitutional Ambiguity and Jurisdictional Conflicts
One of the least resolved issues is jurisdiction over taxes such as VAT and Stamp Duties, with the Supreme Court being involved in cases of disputes between the federal government and some state governments over who collects VAT. Despite the coordination efforts of the Joint Revenue Board Act, which aims to harmonise rates and other tax administration processes across various tiers of government, it does not explicitly address or override the provisions of the Constitution, on which many of these issues are based. This poses a risk for especially noncompliant states that are politically combative or at loggerheads with the federal government, or those with high-value natural resources that are major revenue generators at the state level.

4ii. Superficial institutional reform?
While the FIRS rebranding to the NRS is a much-publicised reform as part of the move to improve efficiency and effectiveness, changing the name alone does not address underlying systemic inefficiencies. Cosmetic rebranding will not be transformational in a culture of inaction without significant changes in other areas, such as an autonomous budget, a skilled workforce, internal performance metrics linked to public service outcomes, and progressive autonomy from the Ministries of Finance at both the federal and state levels.
To be continued tomorrow.
Dr Oluwadele is an Author, Chartered Accountant, Certified Fraud Examiner and Public Policy Scholar based in Canada. He can be reached via:[email protected]