Nigeria’s tax reforms have generated high hopes of increased revenues for the state, as well as a more streamlined general system. What are the issues involved and how are they being addressed?

Nigeria’s tax landscape was changed by four interconnected Tax Reform Acts, which were signed into law by President Bola Ahmed Tinubu on 26 June, 2025, and became effective from 1 January, 2026.

These acts unified more than a dozen legacy federal tax laws, including the former Companies Income Tax Act, Per- sonal Income Tax Act and Value Added Tax Act, into a single, unified statute called the Nigeria Tax Act (NTA).

The major highlight in the new tax regime is the relief for small companies. The exemption threshold for Companies Income Tax, Capital Gains Tax, and the newly introduced Development Levy has been raised from N25m ($18,522) to $74,088 in annual turnover, alongside a fixed asset ceiling of N250m ($185,811). This has reduced the impact of the federal tax burden on small businesses.

For bigger players, the Capital Gains Tax (CGT) rate for companies has been increased sharply from 10% to 30%, aligning it with the Companies Income Tax rate and removing the arbitrage that once existed between trading income and capital gains. In order to make the system more equitable for individuals, capital gains are now taxed at their applicable progressive rates.

We want to use technology so that people don’t need to worry about filing returns. Even in the US for example, if you have a bank account, there are some standard returns for tax purposes that banks have designed into their apps.

The process makes tax professionals’ and businessmen’s lives easier. That is what we hope technology will help us to achieve in Nigeria, so that the stress people experience is less. But that is a long-term plan.

What are the issues around the Electronic Money Transfer Levy, which has changed to Stamp Duty?

A few years back, the Federal Government of Nigeria, through one of the Finance

Acts, changed Stamp Duty to the Elec- tronic Money Transfer Levy and set a formula for sharing it between the federal, state and local government. In our view, that was unconstitutional.

In our commitment to building trust, we have taken out the Electronic Money Transfer Levy and reverted to Stamp Duty. The name may be differ- ent, but the money is now collected and remitted to the state, instead of the previous practice where it was collected and shared.

Nigerians have expressed concerns that their funds in banks will be debited directly for tax purposes.

Effective 13 January, 2020, the Fi- nance Act introduced a require- ment to add your Tax Identifica- tion Number (TIN) to your bank account. People simply complied with the law.

What has changed is the re- porting threshold, which was increased from N10m ($7,409) to $18,522 per quarter – that is, $74,088 annually.

Even if you have $741,000 in your ac-count, no tax authority can debit your account for unpaid taxes unless there is a court order. Even in extreme cases where someone owes hundreds of mil- lions and refuses to pay, the government cannot just remove money. They must assess you, notify you, allow objections, conclude the process, go to court, and get a judge’s order. Without that, nobody can touch your account.

What are the implementation phases of the reforms and how are you applying them? One of the biggest challenges and risks is the lack of trust and misinformation. Also, people don’t like uncertainty or changes they weren’t previously aware of. There is the issue of capacity, too.

The Nigerian tax burden is the low- est, or one of the lowest – even when compared to other African countries like Kenya. The Value Added Tax (VAT) rate in Nigeria is 7.5%. In Kenya, it is 16%; in Ghana, 15%, and in South Africa, 15%.

There are consumption taxes to con- sider, such as airtime tax. In Kenya, for example, if you buy airtime, you pay tax of 31%, comprising VAT at 16% and excise duty of 15%. I am not suggesting that Nigeria should increase tax rates.

What has been the market reaction to the capital gains part of the tax requirements? The initial reaction was not encouraging.

Some said capital gains tax would col- lapse the market.

Over the last 10 years, we have un- successfully tried to reform the capital markets. Under the new tax laws, we introduced exemptions from stamp duties and a reduction of the Com- pany Income Tax rate. But not a single positive move is being talked about. The focus has been almost entirely on capital gains tax, even though most people have exemp- tions - subject to certain conditions; but they say the market will crash! There is broad relief for investors. The vast majority are effectively ex- empt from capital gains tax - about 99%. If in a 12-month period, an investor’s total share sale proceeds don’t exceed 150m naira, and the total gains don’t exceed 10m naira, they are permanently exempt from CGT.

Some investment vehicles, such as mutual funds and real estate investment trusts, are also unconditionally exempt. To the tiny minority who are not exempt, we say, if you don’t want to pay capital gains tax, please reinvest your proceeds.

How has the naira depreciation impacted on market confidence, especially regarding foreign capital inflows?

One of my committee members is a tax consultant. He has a foreign portfolio investor client who brought millions of dollars to Nigeria about 12 years ago, buying shares in three banks. He exited about three years ago, and gained about 50% in naira terms; but over the full 12- year period, he ultimately ended up with a principal below the original value in dollar terms.

Guess what happened? He was still made to pay capital gains tax of over a billion naira.

Under the new tax law, any losses, whatever their cause, can be taken into account, so the tax burden is reduced or eliminated.

So from an investor’s perspective, the new tax law just makes Nigeria’s capital market more attractive.

Can we say that the President has introduced new taxes?

No, the President has not introduced any new taxes. From day one of this admin- istration, he has been very intentional that multiple taxation must be tackled.

Let me give you examples of some tax- es this President has suspended, repealed or completely removed.

Excise tax on airtime and telecom data - reversed. The cybersecurity levy on money transfers - suspended. The carbon tax on single-use plastic - sus- pended. Carbon tax on imported vehicles from year 2000 and later - suspended as well.

So finally, these reforms are about more than just taxes. They represent a reset of our economy and how we deliver the social contract. They will affect peo- ple, and technological processes, but we must implement them diligently. n

The four interconnected Tax Reform Acts unified more than a dozen legacy federa tax laws into a single Nigeria Tax Act.

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