Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has revealed that the federal government introduced the new tax reform to address Nigeria’s fragmented, outdated, and inefficient tax system, which has weakened revenue generation and constrained economic growth.

In an exclusive interview with the Nigerian Tribune recently, Oyedele explained that the reform was designed to reduce the tax burden on workers as well as small and large businesses, contrary to the widespread perception that tax reforms automatically mean higher taxes.

He said value added tax was removed from essential consumptions such as food, healthcare, and education to protect low-income households, while the VAT rate was retained at 7.5 per cent.

According to him, the reform also expanded the scope for businesses to claim input VAT on assets and overheads, a move expected to eliminate hidden VAT costs that were previously passed on to final consumers.

Oyedele added that the reform would improve fairness in the tax system, increase workers’ disposable income, simplify compliance for small businesses through higher exemption thresholds, and ultimately reduce leakages while creating a more conducive environment for doing business in Nigeria.

He said, “This reform became necessary because the nation’s tax laws and administration had become fragmented, outdated, and highly inefficient, resulting in sub-optimal revenue generation and an unconducive fiscal environment for growth.

“Most people understandably associate “tax reform” with paying more because of the word “tax”. However, this reform is actually designed to reduce the current tax burden of workers, small and large businesses. VAT is removed from essential consumptions such as food, healthcare and education to shield low-income households. The VAT rate remains at 7.5%, and the reforms now allow businesses to claim input VAT more broadly on assets and overheads, which is expected to reduce the “hidden VAT” that was previously embedded in final consumer prices.

“The biggest win in this reform is for the economy as a whole. While ordinary citizens benefit from fairness and less pass-through costs, workers benefit from higher disposable income, and small businesses gain from higher exemption thresholds and simpler compliance, the overarching result is more trust, fewer leakages, and less friction to do business.”

Tribune Online reports that President Bola Ahmed Tinubu, in June 2025, signed into law four major tax legislations. The legislations, which commenced on January 1, 2026, include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.

Copyright © 2026 Nigerian Tribune Provided by SyndiGate Media Inc. (Syndigate.info).