Tinubu’s Tax Revolution: A Bold Step Toward Nigeria’s Economic Rebirth

BY PRINCE TONY OGBETERE

In a historic move that could redefine Nigeria’s fiscal destiny, President Bola Ahmed Tinubu (Thursday) today signed four far-reaching tax reform bills into law, signaling the most comprehensive overhaul of the country’s tax system in decades. 

This bold legislative leap consolidates and restructures Nigeria’s fragmented and complex tax architecture, aiming not only to increase government revenue but also to simplify compliance, foster investment, and build a more inclusive and equitable economic future.

The first of the four bills, the Nigeria Tax Bill (Ease of Doing Business), merges various tax laws —such as those on income tax, VAT, stamp duties, and capital gains—into a single, unified framework. This consolidation ends decades of confusion caused by overlapping tax regimes and offers clarity and predictability to individuals and businesses.

The second bill, the Nigeria Tax Administration Bill, seeks to modernize and standardize tax collection across all levels of government by mandating the use of a Tax Identification Number (TIN), introducing data-sharing protocols with financial institutions, and implementing anti-tax avoidance measures.

The third, the Nigeria Revenue Service (Establishment) Bill, transforms the Federal Inland Revenue Service into the new Nigeria Revenue Service (NRS), a more autonomous, accountable, and performance-driven body with a mandate to collect both tax and non-tax revenues.

Finally, the Joint Revenue Board (Establishment) Bill introduces a governance structure to coordinate tax authorities across federal, state, and local governments while establishing a Tax Appeal Tribunal and a Tax Ombudsman to handle taxpayer complaints and disputes efficiently.

What makes these reforms stand out is not just their scale but their strategic balance. While they aim to boost government revenue in a country with one of the lowest tax-to-GDP ratios in the world (just over 10 percent) they also introduce well-thought-out reliefs and exemptions.

Individuals earning ₦800,000 or less annually are exempt from taxation, as are small businesses with turnovers not exceeding ₦50 million.

Additionally, essential goods and services like food, education, healthcare, renewable energy, rent, and public transportation remain exempt from VAT. These provisions offer a humane cushion for low-income earners and the most vulnerable populations, softening the impact of broader fiscal tightening.

The reforms also bring a much-needed modernization of Nigeria’s tax system. With digital VAT collection tools, stricter filing requirements, and enhanced enforcement capabilities, the new laws align Nigeria more closely with global best practices.

Employees across sectors are now required to file annual tax returns that include all income streams, not just their Pay-As-You-Earn (PAYE) earnings.

For NGOs and professional entities, the new compliance environment is tighter, with penalties for non-compliance reaching up to ₦100,000 for initial defaults and ₦50,000 for each additional month of non-compliance. While this may raise concerns among certain sectors, the reforms are designed to foster transparency and ensure that all economic participants contribute fairly to national development.

Nevertheless, the legislation is not without controversy. A proposed increase in VAT from 7.5% to 12.5%—and eventually to 15% by 2030—was retained at the current rate after considerable debate. Even so, some stakeholders remain concerned about the potential inflationary effects on consumer prices.

Government officials, however, insist that the targeted exemptions and VAT credits for businesses will actually reduce the price of many basic goods. Another contentious issue lies in the revised VAT revenue-sharing formula, which now allocates around 60 percent based on consumption rather than population.

This shift has sparked resistance from several northern governors who argue that it disproportionately benefits the more industrialized and consumption-heavy southern states, potentially deepening regional economic disparities.

Yet, despite these debates, the overarching direction of the reforms remains clear: they represent a decisive step toward economic stabilization, fiscal responsibility, and inclusive growth. Nigeria’s current macroeconomic challenges—ranging from currency volatility to high inflation and growing public debt—demand bold and strategic policy shifts.

These tax reforms, alongside subsidy removal and currency liberalization, form a coordinated effort to reset the economy on a sustainable path.

The establishment of the Nigeria Revenue Service, backed by modern infrastructure, real-time data analytics, and improved administrative capacity, holds the promise of increasing revenue without resorting to excessive borrowing. The creation of a Joint Revenue Board, a Tax Appeal Tribunal, and a Tax Ombudsman adds an element of governance reform, ensuring that taxpayers not only meet their obligations but are also protected from abuse and unfair practices.

President Tinubu’s tax revolution is not merely about collecting more money. It is about rebuilding trust in the system, encouraging compliance through fairness, and making Nigeria a more attractive destination for domestic and foreign investment. If implemented with discipline and transparency, these reforms could become the foundation upon which Nigeria’s economic renaissance is built.

Today’s signing is more than a legislative event—it is a signal that Nigeria is ready to move beyond short-term fixes and embrace structural change. The world is watching. The stakes are high. But so is the promise of a better Nigeria.