Condia Insider: How Nigeria’s new tax law will affect you

🍔 Quick Bite: President Tinubu has signed four major tax reform bills into law, overhauling Nigeria’s tax system with new rules on VAT, personal income, corporate tax, and digital earnings. The reforms aim to simplify compliance, widen the tax base, and boost investor confidence.

🧠 The Breakdown

On 26 June 2025, President Bola Tinubu gave Nigeria’s tax system a thorough overhaul when he signed into law four bills aimed at bringing the country’s revenue framework into the digital age. These measures simplify tax collection, reduce the burden on compliant businesses, and seek to position Nigeria as a more attractive destination for investors. 

With the new tax law set to take effect from January 2026, here’s a rundown on what matters most for founders, employees, investors, and freelancers.

Modernising VAT and revenue administration

Nigeria now joins a handful of African countries in requiring VAT fiscalisation and real-time e-invoicing. Every registered business feeds its transaction data directly into the tax authority’s system rather than relying on paper filings. At the same time, essentials such as basic food items, pharmaceuticals, educational books and electricity services are now zero-rated, and sellers can recover the VAT they incur on inputs. This change provides edtech, healthtech, and agritech companies with more predictable cash flow.

In a further bid to streamline the system, the Federal Inland Revenue Service, the Joint Tax Board and all subnational tax bodies have been merged into the Nigeria Revenue Service (NRS). A single online portal now handles corporate tax, VAT, withholding and excise duties. Businesses should see faster assessments, simpler reconciliations and fewer surprises, while the new Tax Appeal Tribunal and Office of the Tax Ombud promise more transparent dispute resolution.

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Tax relief for businesses and individuals

Small businesses with a turnover of up to ₦50 million are exempt from paying Company Income Tax (CIT) and are also relieved of the requirement for mandatory audited financial statements. This could allow startups to invest more money in product development, marketing, or hiring, rather than in audit fees and tax payments. Larger companies will also benefit, with the CIT rate falling from 30% to 27.5% in 2025 and to 25% in 2026, helping Nigeria compete more effectively with regional countries such as Ghana, which has a 25% CIT.

On the personal side, anyone earning up to ₦800,000 a year pays no personal income tax, and those earning up to ₦1 million receive reduced rates. The top bracket is capped at 25%, and generous exemptions now apply to severance and injury compensation up to ₦50 million. These steps ensure that low-income households retain more of their earnings while higher earners contribute their fair share.

Bringing remote work and digital assets into the fold

Nigerians earning foreign income, whether as freelancers, remote employees, or digital entrepreneurs, must register with their state tax authority, convert earnings at the Central Bank’s official rate, declare them in naira, and pay personal income tax on a monthly basis. Platforms like Payoneer and Wise already link to the Bank Verification Number system, making compliance harder to avoid. Lagos alone plans to raise ₦200 billion annually from taxing remote workers.

Digital assets also come under clear rules for the first time. Cryptocurrencies, non-fungible tokens and other tokenised instruments are treated as taxable property. Gains from trades or disposals fall under capital gains or corporate tax regulations, and exchanges must hold a Nigeria Revenue Service licence or face penalties. While this adds a compliance burden, it also removes uncertainty for institutional investors and helps build a more transparent market.

Taken together, these reforms broaden the tax base without stifling innovation. Startups keep more capital, established firms enjoy leaner tax bills, and employees take home larger paychecks. The additional revenue generated can then be directed into critical areas such as education, technology infrastructure and Healthcare. 

If implemented effectively, Nigeria’s revamped tax code could restore investor confidence and power the next phase of the country’s economic growth. Whether that is the case or not, we will all have to wait until next year to see how effectively these new tax laws are implemented

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