Nigeria has entered a critical phase of economic transformation with the introduction of sweeping fiscal and tax reforms, designed to reshape the nation’s financial architecture and lay the groundwork for long-term growth. Spearheaded by the Presidential Fiscal Policy and Tax Reforms Committee under the leadership of Taiwo Oyedele, the reforms aim to drive efficiency, transparency, and fairness in the nation’s tax system.
Why the Reform Was Needed
Before these changes, Nigeria’s tax-to-GDP ratio lagged behind at under 10%, far below the African average. The government also grappled with an unsustainable debt servicing burden, fiscal leakages, and an overdependence on oil revenue. With outdated tax laws, numerous overlapping levies, and a fragmented administration system, the environment for business growth and investment was less than ideal. These challenges called for bold, strategic reforms; ones that don’t just increase revenue, but promote equity, efficiency, and economic inclusion.
Core Pillars of the Reform
The reforms rest on five key pillars:
1. Fair Taxation – Tax policies that are progressive, eliminate taxes on capital, and reduce burdens for low-income earners and small businesses.
2. Policy Coordination – Streamlined frameworks across all levels of government for coherence and accountability.
3. Responsible Spending – Emphasis on productive public expenditure and transparency.
4. Sustainable Borrowing – Shift from debt-dependency toward revenue-led growth.
5. Enabling Environment – Targeted incentives and simplified processes for businesses and households.
Key Policy Shifts at a Glance
- Personal Income Tax (PIT):
A more progressive structure with higher exemption thresholds and reduced tax rates for middle-income earners. - Corporate Income Tax (CIT):
Small and medium enterprises will now enjoy a 0% CIT rate, with simplified reporting obligations and friendlier capital allowance rules. - Withholding Tax (WHT):
Exemptions introduced for manufacturers and smaller businesses, with credit notes issued by taxpayers. - Value Added Tax (VAT):
New provisions allow VAT claims on services and assets, alongside a more efficient refund system. - Capital Gains Tax (CGT):
Integrated into the broader income tax regime, with exemptions for small investors and gains below ₦10 million over 12 months. - Tax Agents & Representation:
Every company is now required to appoint an accredited tax representative to handle compliance matters. - The Tax Ombudsman:
A new independent office to protect taxpayer rights, resolve disputes, and ensure checks on arbitrary enforcement.
Digital Transformation & Harmonisation
The reforms also prioritize digital transformation through e-invoicing, fiscalisation, and unified tax data systems to reduce evasion and administrative costs. A National Single Window will consolidate multiple tax and revenue platforms, streamlining compliance for businesses.
Economic Development Incentive Scheme
To stimulate targeted sectors, the government is introducing long-term tax incentives across 14 key industries from agriculture and renewable energy to ICT, health, and transportation. Investment thresholds and sunset periods have been clearly defined to ensure transparency and drive strategic industrialization.
Who Benefits from the Reforms?
Businesses will enjoy:
- Lower compliance costs and reduced tax complexity
- Expanded access to VAT refunds and tax incentives
- More certainty in tax treatment and planning
Households will benefit through:
- Tax reliefs for lower-income groups
- VAT exemptions on essential goods
- Improved purchasing power via indirect subsidies
Government stands to gain from:
- Increased non-oil revenue
- Stronger fiscal discipline
- Better credit ratings and investor confidence
Implementation & What Comes Next
The reforms officially take effect from January 1, 2026, following the presidential assent on June 26, 2025. Stakeholders must start preparing now by updating internal processes, training staff, investing in technology, and aligning with the new compliance requirement.
At BMO & Co, we specialize in helping businesses interpret and adapt to evolving tax regulations. Whether you’re a small enterprise or a large corporation, our tax advisory team is ready to guide you through these reforms and position your company for compliance and efficiency.
Need clarity on how these reforms affect your business? Send us an email: info@bmoandco.com or bakinmoladun@bmoandco.com for strategic tax consultation tailored to your specific operations.