Change Is Here, Are You Ready?
Let’s be honest: whenever “tax” and “reform” show up in the same sentence, most business owners flinch. It often feels like more rules, more paperwork, and less breathing space. But this time, it’s different.
On June 26, 2025, the Nigerian government signed into law four sweeping tax reform acts that are about to reshape how businesses pay, plan, and think about taxes. These aren’t minor tweaks, they’re a structural overhaul.
If you run a business in Nigeria whether you’re a startup, a growing SME, or a large corporation, these reforms will likely touch your operations, your finances, and how you report earnings.
So, what just happened? And how can your business prepare without panic?
Let’s break it down.
The Big Picture: 4 New Acts, 1 Big Goal
Here’s what landed on President Tinubu’s desk and got signed:
- Nigeria Revenue Service Act (NRSA) – introduces a new central revenue agency to replace FIRS.
- Nigeria Tax Administration Act (NTAA) – standardizes how tax is collected and managed across federal, state, and local governments.
- Nigeria Tax Act (NTA) – consolidates and refreshes decades of fragmented tax rules.
- Joint Tax Board Act (JTBA) – redefines how tax authorities at different levels collaborate.
What do all these have in common? Simplicity, uniformity, efficiency. The idea is to remove guesswork and reduce friction between businesses and tax authorities.
What’s in It for Businesses? A Mix of Relief and Responsibility
Let’s start with the good news because there’s plenty.
Relief for Small Businesses
If your business earns ₦100 million or less annually and holds fixed assets under ₦250 million, this is your moment to breathe.
No more Corporate Income Tax (CIT).
No Capital Gains Tax (CGT).
Exemption from the new Development Levy (more on that shortly).
The government wants to support small enterprises, and this reform backs that intent with clear action.
But Larger Businesses Face New Obligations
Here’s where the game tightens:
A Development Levy of 4% on annual profits replaces several overlapping charges (like the Education Tax, IT levy, etc.).
Capital Gains Tax is now 30% for companies, double the previous rate.
Large companies must ensure they’re paying at least 15% effective tax. If not, a “top-up tax” will be applied.
Bottom line? Big businesses will need to review their books carefully.
Beyond Numbers: VAT, Personal Income, and a Digital Overhaul
VAT Is Going Digital
While the VAT rate stays at 7.5%, the method of tracking it is changing.
Electronic invoicing is now mandatory.
Real-time VAT reporting, also called fiscalization, is becoming standard.
More items have been zero-rated: think basic food items, medicines, and exports.
So, it’s not just about how much you pay, it’s about how you document every transaction.
Personal Income Tax (PIT) Gets a Makeover
Employees (and employers) will want to pay attention here.
The tax-free threshold is now ₦800,000 a year.
A new progressive rate system means higher earners contribute more, but low-income earners get a bit more room.
If you lose your job, up to ₦50 million in severance pay is tax-free, a humane touch in a tough economy.
This Reform Isn’t Just Financial, It’s Cultural
At its core, this reform is about transparency and trust. By merging agencies, simplifying rates, and digitizing processes, the government is signaling that it wants to modernize Nigeria’s economy and bring more businesses into the formal system.
And for the first time ever, a Tax Ombudsman has been established, someone businesses can appeal to when tax disputes arise. It’s a small win, but a powerful one.
What Should You Be Doing Right Now?
If you’re a business owner, CFO, or consultant, here’s your short action list:
1. Assess Your Current Tax Position
Run a full internal audit to understand where you stand under the new rules.
2. Upgrade Your Systems
Your ERP and invoicing tools must support e-invoicing and VAT tracking.
3. Train Your Team
Everyone handling money, reporting, or compliance needs to be up to speed fast.
4. Revisit Your Tax Planning Strategy
What worked in 2024 may not serve you in 2026. It’s time to revise.
5. Work With the Right Advisors
Tax isn’t just numbers, it’s strategy. You’ll need partners who get the terrain.
Final Thoughts: Don’t Wait for January
The implementation date is January 1, 2026, but smart businesses won’t wait until the New Year. The structure is changing, the systems are tightening, and the penalties for non-compliance will likely follow.
This reform is a chance to tidy up your house before the government comes knocking. Take it.
Need Help Navigating the Reforms?
Our team of experts are already working with businesses to align with the new laws. If you need a tailored review, system setup, or strategic guidance let’s talk, visit elizabethmaddeux.com or send a mail to hello@elizabethmaddeux.com to book a free consultation.
Written by:
Olayinka Bayode
