MARCEL MBAMALU
In June, President Bola Tinubu signed into law four far-reaching tax reform bills, presenting them as a decisive reset for Nigeria’s long-fragmented tax system.
The government framed the reforms as a way to simplify taxation, widen the tax base, and protect low-income earners. While the intentions may have been genuine, public criticism began even before the ink had dried.
Fresh government signals on implementation, reinforced during the Christmas period, as the government confirm that full compliance is expected from 1st January, reviving public debate and sharpening suspicion.
Join our WhatsApp ChannelComplicating matters are allegations that the versions of the laws presented to the National Assembly differed from those eventually signed, a claim the government has firmly denied. But, for many, the controversy highlights not just the reforms themselves, but wider questions of process, transparency, and trust. If a law of such magnitude cannot be clearly explained, openly defended, and broadly trusted, can it truly serve the people it purports to protect?
Old tax system versus new tax system. What actually changed
A close look at the old tax law reveals it was outdated and long overdue for revision. Personal income tax in Nigeria traces back to colonial times, with initial forms introduced regionally in the early 1900s and later consolidated into formal taxation laws by the 1940s. VAT was introduced much later under the Value Added Tax Decree of 1993, coming into effect on 1 January 1994.
For decades, companies’ income tax, personal income tax, capital gains tax and VAT operated under separate laws, creating overlapping obligations across federal, state and local governments. Compliance was complex, enforcement was inconsistent, and public understanding was limited. The new tax laws promise to change that.
At the centre of the new laws is the Nigeria Tax Act, which collapses many existing tax laws into a single framework. Individuals are meant to look to one principal law to understand their obligations. The government says this consolidation will reduce confusion and loopholes.
The new personal income tax structure is simpler and more progressive. Individuals with an annual income of 800,000 or less will pay no personal income tax. Above that threshold, tax will be levied in bands up to a maximum of 25 per cent for the highest earners. For example, income between 800,001 and 3,000,000 is taxed at 15 per cent, while income above 50,000,000 is taxed at 25 per cent. Previously, virtually all earners paid at least 7–10 per cent, even at lower income levels.
For businesses, the changes are also significant. A “small company” with an annual turnover of up to 100,000,000 and total fixed assets of 250,000,000 or less is exempt from company income tax, capital gains tax and the new development levy. Larger companies will see corporate tax rates gradually reduce from 30 per cent to 27.5 per cent in 2025, then 25 per cent from 2026.
Institutionally, the reforms replace the Federal Inland Revenue Service with the Nigeria Revenue Service, a body with broader powers and greater autonomy, designed to harmonise collection across federal, state and local governments.
However, worth noting is that the reforms are not contained in a single law. They are spread across four new statutes. The Nigeria Tax Act consolidates substantive tax rules that were previously scattered across multiple laws. The Nigeria Revenue Service Act replaces the Federal Inland Revenue Service and sets out new powers for tax administration and enforcement. The Joint Revenue Board Act is meant to coordinate tax collection across federal, state and local governments, addressing years of overlapping authority. The Tax Appeal Tribunal Act governs how tax disputes are resolved and outlines the process for challenging assessments.
A closer look shows that if the government keeps its promises, the new tax law is more structured, potentially less stressful, and could reduce the burden on the poor. But Nigerians are protesting, arguing that life is already hard. Is the confusion about the barber not being able to cut hair, or that the clipper is blunt?
Why Nigerians are worried
It is important at this point to highlight a few factors that seem to be driving public anxiety about the tax. For many, the laws are broad and technical, yet no detailed explanations in layman’s understanding, while the reforms were unveiled quickly and with little public preparation, triggering a familiar unease.
This contrasts sharply with how other bills have moved through the National Assembly. For instance, Proposals on gender representation and broader social reforms, including constitutional amendments to expand women’s political participation, stalled for years and were ultimately rejected in 2022 after prolonged debate that began as far back as 2021.
Other major reforms, such as the Petroleum Industry Bill, took more than a decade of legislative struggle before becoming law in 2021. The speed with which the tax laws were passed and signed has raised questions. Is urgency driven less by reform and more by the state’s need to extract revenue from citizens already under strain, without clear assurance of corresponding public benefit?
Yet, the tenor of public concern is not just tied to the speed of the rollout, but also to the absence of effective communication. The result has been confusion over basic questions: who pays, how much and when. Again, the calls for citizens to brace for sweeping tax changes feel out of step with lived reality.
For Nigerians, taxes are expected to bring better services, yet years of payments have not delivered reliable electricity, functional health facilities, or safe roads. Government borrowing continued despite revenue collection, deepening credibility concerns.
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Historical harassment in tax enforcement adds fear that the new Nigeria Revenue Service could repeat past abuses without safeguards. Inflation since 2023 has worsened matters: headline inflation peaked at 34.6 per cent in November 2024, food inflation was near 40 per cent, easing to about 16 per cent by late 2025, but prices remain burdensome.
Maybe low-income earners and small businesses are technically exempt as stated, yet many doubt protections, fearing hidden charges, compliance costs, VAT pass-throughs, and aggressive enforcement. Hence, questions remain whether the reforms genuinely protect the vulnerable or merely create an appearance of relief.
Allegations, denials and the integrity of the law-making process
A key flashpoint in the tax law controversy is not only the reforms themselves but how the laws were finalised after leaving the National Assembly. On 17 December, House member Abdussamad Dasuki alleged that the versions gazetted differed materially from the harmonised bills passed by both chambers.
Although the Presidential Committee on Fiscal Policy and Tax Reforms denied the Allegation, one wonders why a sitting legislator raised it if it is not true? The claim further intensified fears that the law may be designed to burden citizens rather than serve them.
Many, including opposition parties and Senator Ali Ndume, urged President Tinubu to suspend implementation and set up an ad hoc committee to verify the signed copies. The Nigerian Bar Association said any law whose authenticity is in doubt should not take effect. The Chartered Institute of Taxation of Nigeria also flagged risks to legal certainty and trust.
Although the controversy prompted the National Assembly to order re-gazetting and the issuance of certified copies, the critical question remains why a full investigation has not been completed before implementation. After all, Laws affecting every citizen’s pocket should not be rushed or disputed.
This saga is indeed fundamentally about transparency, constitutional integrity and accountability. If no alteration occurred, both the National Assembly versions and the gazetted texts should be publicly released side by side. Trust is essential; the government must listen to public concerns, pause implementation, clarify disputed provisions, and provide clear guidance before enforcement begins.
