Nigeria’s tax system is set for its most dramatic overhaul since independence, with the Federal Inland Revenue Service (FIRS) announcing reforms that exempt food, education, shared transport, and agriculture from value-added tax.
The reforms, signed into law by President Bola Tinubu in June, consolidate multiple statutes into a single tax code scheduled to take effect in January. Officials say the measures will ease pressure on households and businesses while strengthening government finances.
Zacch Adedeji, the FIRS executive chairman, hailed the reforms as “the best thing that has happened to Nigeria’s fiscal ecosystem since 1960” in an interview marking his two years in office. He credited Tinubu for fulfilling his campaign pledge to simplify tax compliance and dismantle hurdles faced by taxpayers.
Under the new regime, businesses with annual turnover below ₦50m will be exempt from taxation, while thresholds for personal income tax have been raised to protect low earners. The number of tax categories will also be cut to single digits.
The so-called “Tax Acts quartet”—comprising the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act—aims to broaden the tax base, curb evasion, and bring greater transparency across all tiers of government. As part of the changes, FIRS will be renamed the Nigeria Revenue Service, reflecting its wider mandate.
The reforms have already lifted Nigeria’s tax-to-GDP ratio from 10% to 13.5% in two years, with a target of 18% by 2027. In August, the federation account disbursed a record ₦2tn, almost 70% of which came from tax collections. Officials say stronger revenue has allowed 30 states to repay ₦1.85tn in debts, while debt servicing costs have fallen from 90% to around 50% of income.
Adedeji acknowledged that the reforms have brought “the pain of a woman in labour” but insisted the government is cushioning the impact with interventions such as compressed natural gas buses and support for local refiners. He also dismissed fears over a petrol surcharge included in the law, saying it would only take effect if activated by ministerial order.
“The president has removed the burdens and hurdles in the way of businesses,” Adedeji said. “When companies expand and make profits, the country prospers. That is the spirit behind these reforms.”
