Introduction
On 26 June 2025, the Federal Government of Nigeria enacted a landmark tax reform package comprising four key statutes: the Nigeria Tax Act, 2025, Nigeria Tax Administration Act, 2025, Nigeria Revenue Service Act, 2025, and the Joint Tax Board (Establishment) Act, 2025. These laws, which take effect from 1 January 2026, modernise Nigeria's tax architecture, replacing overlapping and outdated frameworks with a streamlined and technology-driven regime.
These laws repeal outdated and overlapping tax legislation and
introduce a streamlined, modern tax system. The aim is to improve
compliance, expand the national tax base, and align Nigeria's
tax administration with international best practices.
This article provides a concise breakdown of the new regime and
highlights key implications for individuals, businesses, and tax
advisers.
Overview Of the Four Reform Acts
- Nigeria Tax Act, 2025
This consolidates all major federal tax laws; Companies Income Tax, Personal Income Tax, Value Added Tax (VAT), Capital Gains Tax, and Petroleum Profits Tax into a single legislative instrument. It simplifies tax incentives, eliminates redundant exemptions, and clarifies what constitutes taxable income and allowable deductions.
- Nigeria Tax Administration Act, 2025
The NTA harmonises tax administrative procedures and introduces a unified digital compliance system.
- Nigeria Revenue Service Act, 2025
This Act establishes the Nigeria Revenue Service (NRS), replacing the Federal Inland Revenue Service (FIRS). The NRS is charged with tax collection, taxpayer registration, and automation of all federal tax functions. It also supervises taxpayer compliance through digital monitoring tools and nationwide coordination with state tax authorities.
- Joint Tax Board (Establishment) Act, 2025
The JTB is now formally established as a statutory body with authority to drive inter-agency harmonisation. It ensures consistency in enforcement, facilitates joint audits, and manages a central database linking federal and state taxpayer records.
Key Changes for Individuals
- Exemption for Low-Income Earners
Individuals earning less than ₦800,000 annually are fully exempt from Personal Income Tax. - Rent Relief Deduction
Salaried individuals may now deduct up to ₦200,000 in annual rent from taxable income. - Updated Personal Income Tax Bands
Rates remain progressive but with adjusted thresholds to reflect inflation. - Simplified Filing for Salaried Workers
Individuals earning only salary and allowances under ₦5 million per annum are covered under an automatic simplified returns scheme. - VAT on Streaming and Digital Content
Subscription services such as Netflix, Spotify, YouTube Premium, and other foreign-hosted digital platforms are now subject to Nigerian VAT. - Mandatory UTIN for All Taxable
Individuals
Every taxpayer must now register for a Unified Taxpayer Identification Number (UTIN), which will be used across employment, investment, rent, and other income types.
These measures simplify compliance for low-income earners while extending tax liability to users of digital and foreign-based services, reflecting global VAT enforcement trends.
Key Changes for Businesses
- Small Business Exemption with Asset
Limit
Businesses with an annual turnover below ₦100 million and total assets not exceeding ₦250 million are fully exempt from:
- Companies Income Tax
- Capital Gains Tax
- Development Levy
- Lower Corporate Income Tax Rate
For medium and large companies earning above ₦100 million, the rate is now reduced from 30% to 25%. - Development Levy Introduced
A 4% Development Levy now applies to taxable profits of large companies. This levy consolidates multiple previously uncoordinated levies, including:
- Industrial Training Fund (ITF)
- National Information Technology Development Levy (NITDA Levy)
- Tertiary Education Tax
- NASENI Levy
Businesses will now have to deal with a single consolidated levy, reducing administrative burden and potential overlaps in remittances.
- Minimum Tax Rules for Loss-Making
Entities
A statutory minimum tax now applies to companies even where they report a loss, this discourages base erosion and artificial tax avoidance schemes. - Compulsory VAT Compliance for Digital
Businesses
Any local or foreign business providing digital goods or services (including e-commerce, digital ads, e-learning, and logistics) must:
- Register with the NRS;
- Collect and remit VAT;
- File monthly returns electronically.
- Virtual Asset Service Providers (VASPs) Reporting
Obligation
Any company involved in the exchange, custody, or management of virtual assets (crypto, NFTs, etc.) must now submit detailed monthly returns to the tax authority, including:
- Customer details (name, phone, email, NIN, Tax ID);
- Counterparty information where applicable
- Description and type of virtual asset service provided;
- Date, value, and sales price of each transaction;
In addition, the NRS is empowered to automate tax administration processes, including assessment and information gathering using digital tools.
MSMEs are encouraged to formalise their operations through generous exemptions. However, larger and digital-native companies are now subject to stricter compliance, especially in the virtual asset and e-commerce sectors.
Conclusion
The 2025 tax reforms reflect Nigeria's shift towards a digitally enforced, compliance-driven tax regime. They aim to make taxation fairer, simpler, and more transparent while boosting government revenue. Businesses must now adjust their internal systems, pricing, and reporting frameworks to meet new standards. Individuals especially users of digital services must be aware of their VAT obligations and registration requirements.
With the Nigeria Revenue Service (NRS) set to commence full operations by 1 January 2026, all stakeholders, employers, entrepreneurs, investors, and tax consultants should take proactive steps to align with the new framework.
Tax compliance is no longer optional. It is enforceable, digital, and closely monitored.
As a multinational corporation, a local start-up, a family-owned enterprise, or an
investor, recording continued business success depends on understanding these reforms and preparing accordingly.
It is highly recommended that tax professionals in Nigeria with a sound understanding of the
terrain of the law, offering full-spectrum tax advisory and legal support tailored to the needs of clients from compliance audits and tax restructuring to dispute resolution and regulatory
engagement be consulted to act decisively, stay ahead of compliance challenges, and
strategic position of your business for the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
