Nigeria’s sweeping tax reforms, set to take effect on January 1, 2026, are reshaping the country’s fiscal landscape and placing fresh responsibilities on businesses, individuals, and finance professionals. Beyond their macroeconomic impact, the new laws demand early preparation and strategic adjustments to minimise compliance risks and tap into new opportunities.
The reforms target every economic class—employers, employees, and even self-employed “hustlers”—as part of a broader plan to expand the tax net, boost revenue, and strengthen fiscal liquidity. They are anchored in four major laws recently published in the official gazette: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Joint Revenue Board (Establishment) Act (JRBEA), and the Nigeria Revenue Service Establishment Act (NRSEA). Together, they aim to streamline the tax system, broaden the base, and stimulate economic growth.
Explaining the changes, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee said the reforms create a fairer system by introducing high exemption thresholds for small businesses. Companies with an annual turnover below N100 million and fixed assets under N250 million will be fully exempt from tax, a move expected to ease the burden on Nigeria’s micro and small enterprises.
For larger companies, the corporate tax rate is expected to drop from 30 percent to 25 percent, pending presidential approval based on the National Economic Council’s recommendation. Additional incentives include top-up tax exemption thresholds of N50 billion for local firms and €750 million for multinationals, along with a 5 percent annual tax credit for investments in eligible priority sectors. Businesses engaged in foreign currency transactions will also have the option of paying taxes in naira at the official exchange rate.
On the individual side, the reforms introduce tax exemptions for low-income earners. Anyone with an annual taxable income of N800,000 or less after reliefs and allowances will be exempt from personal income tax.
While some critics fear the new system could increase financial pressure on Nigerians, the finance minister insists it will strengthen household spending power and support economic activity. “This will put more purchasing power in the hands of those at the lower end of the scale,” he said, arguing that increased consumer spending will ultimately benefit businesses.
However, beyond tax rates and exemptions, the new regime also introduces tighter compliance obligations that companies and tax professionals must prepare for. Advisory firm BakerTilly warns that the evolving rules will require significant adjustments to business operations to remain compliant and benefit from available reliefs.
The firm outlined key steps businesses should begin taking ahead of the 2026 rollout:
Know your tax exposure: Assess how the reforms affect your finances based on your income level, sector, and current obligations. This helps identify potential exemptions and new liabilities.
Refresh your tax plan: Review your financial structure and investment strategies in light of the new Development Levy, capital gains tax changes, and minimum tax rules.
Go digital with compliance: Upgrade your accounting systems to handle e-invoicing, real-time VAT reporting, and electronic record-keeping in line with new Nigeria Revenue Service requirements.
Build knowledge within your team: Ensure payroll, finance, HR, and compliance staff understand the new regulations, especially around VAT, income tax bands, and filing deadlines. Consider training or expert consultations.
Monitor tax risks closely: Establish a system to track potential risks such as capital gains, VAT errors, employment taxes, or transfer pricing. A “tax risk register” can help anticipate issues and guide financial decisions.
For small and medium enterprises, the reforms present both a challenge and an opportunity. Early adaptation—through better planning, digital compliance tools, and capacity building will not only ensure businesses stay on the right side of the law but also position them to benefit from incentives and growth prospects in Nigeria’s evolving tax environment.
