November 10, 2025
A Fellow of the Chartered Institute of Taxation of Nigeria (CITN), Mr Olugbenga Obatola, says the new Tax reform Act will ease the tax burden on low-income earners and redirect Nigeria’s fiscal focus toward taxing affluence.
Speaking with journalists in Ibadan on Monday, Obatola described the Tax reform as one of the country’s most significant economic policy milestones in recent years, aimed at promoting fairness, simplifying taxation, and boosting revenue growth.
He explained that the 2026 Tax reform would make Nigeria’s tax system more progressive by exempting citizens earning below ₦90,000 to ₦100,000 monthly from income tax entirely.
“The reform harmonises many of Nigeria’s multiple tax laws and replaces 11 of the country’s 40 existing taxes while amending 13 others,” he said.
According to him, the Nigerian Tax Act 2025 now consolidates laws such as Company Income Tax, Stamp Duty, Capital Gains Tax, and Value Added Tax into a single framework, making tax administration simpler and more transparent.
Obatola said the reform package contains four key laws:
1. The Nigerian Tax Act 2025
2. The Nigerian Tax Administration Act 2025
3. The Nigerian Revenue Service Establishment Act 2025
4. The Joint Revenue Board Establishment Act 2025
He explained that while operations of the Nigerian Revenue Service and Joint Revenue Board began in June 2025, the other laws would take full effect in January 2026.
Obatola, also a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), said the TaxReform corrects a long-standing imbalance where low-income earners were unfairly taxed despite their limited means.
“If you earn around ₦100,000 monthly, your taxable income after statutory deductions falls below ₦800,000 per year, which now attracts zero per cent tax,” he explained.
He listed six statutory deductions under Section 30 of the Nigerian Tax Act: National Housing Fund, National Health Insurance Scheme, pension contribution, mortgage interest, rent relief, and other allowable deductions.
“The rent relief replaces the Consolidated Relief Allowance (CRA) and is now the higher of 20 per cent of rent allowance or a maximum of ₦500,000,” he said.
He added that taxpayers must now present verifiable documentation such as rent receipts before claiming reliefs, a move that would improve accountability and bring landlords into the tax net.
“A lot of landlords collect rent without paying tax. Once tenants submit rent receipts for reliefs, landlords’ details will become traceable, helping expand the tax net,” Obatola noted.
The expert added that multinational companies would now pay tax on income generated within Nigeria, at an effective rate of 15 per cent, while a global top-up tax ensures parity between local and foreign firms.
He said the reform would also improve Nigeria’s tax-to-GDP ratio, projected to rise from 13.5 per cent in 2024 to 15 per cent by the end of 2025.
Obatola further explained that the 15 per cent import levy on foreign goods was introduced to protect local industries and boost domestic production.
“By discouraging excessive imports and promoting local manufacturing, we are ensuring that Nigeria’s resources serve Nigerians first,” he said.
He urged citizens to embrace the Tax reform with optimism, stressing that the long-term benefits would reduce inequality, strengthen the economy, and improve living standards.
“The poor will finally be able to breathe, and the system will become more equitable,” Obatola concluded. Visit GMTNewsng for more news.
