BY RITA OYIBOKA/JUDITH OBIANUA
At 6:12 a.m. on a humid weekday morning, Mr Odinaka, a mid-level civil servant, is already awake, not because his alarm rang, but because his phone did. A WhatsApp message, forwarded endlessly through family groups and office chats, screams in capital letters: “FROM JANUARY 2026, GOVT WILL DEDUCT TAX DIRECTLY FROM YOUR BANK ACCOUNT!” He scrolls, heart racing.
Another post says anyone earning above ₦66,000 monthly will lose 15 per cent of their income. A third warns that savings built over decades will be “flushed out” by the new tax law. By the time he steps out to join the morning traffic, Odinaka is no longer thinking about fuel prices or school fees. He is thinking about survival, and about an economic future that he is scared of but cannot fully understand.
That anxiety, replicated in millions of homes, markets, offices and motor parks across the country, captures the emotional climate surrounding Nigeria’s most ambitious tax reform in decades.
On June 26, 2025, President Bola Ahmed Tinubu signed into law four sweeping tax reform bills that will fundamentally restructure how the Nigerian state raises revenue from its citizens. They take effect on January 1, 2026. On paper, the reforms promise fairness, simplicity and relief for the poor. In practice, they have unleashed confusion, fear, anger, and a deep crisis of trust.
At the centre of the overhaul is the Nigeria Tax Act (NTA) 2025, a single, consolidated law that repeals and replaces a maze of older statutes, including the Personal Income Tax Act, Companies Income Tax Act, Capital Gains Tax Act and Value Added Tax Act. Supporting it are three institutional laws: the Nigeria Revenue Service (Establishment) Act 2025, which transforms the Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service (NRS); the Nigeria Tax Administration Act, which standardises tax procedures across federal, state and local governments; and the Joint Revenue Board (Establishment) Act, designed to coordinate revenue collection and reduce jurisdictional chaos.
However, that assurance has done little to calm the storm of political and professional opposition trailing the reforms. Former Vice President Atiku Abubakar has openly called for an immediate suspension of the new tax laws, citing allegations that the versions eventually gazetted differed from what was passed by the National Assembly. “Suspend the implementation of the tax law effective January 1, 2026, pending a thorough review,” he demanded.
The Nigerian Bar Association (NBA) has echoed Atiku’s position, warning that the controversy surrounding alleged alterations could trigger serious constitutional questions if left unresolved. For the association, the issue goes beyond taxation and strikes at the heart of due legislative process and the rule of law.
On the other side of the divide, tax authorities have defended both the intent and the structure of the reforms. The Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, has pointed to record revenue collections and the expanded use of technology as early indicators of progress, arguing that the reforms signal the emergence of “a more organised, accountable system.”
According to the Service, the National Identification Number (NIN) issued by the National Identity Management Commission (NIMC) will automatically serve as a Tax Identification Number (TIN) for Nigerians from January 2026, eliminating the need for a separate registration process.
Public sentiment on social media leans mixed, with misinformation fueling panic (e.g., bank blocking fears). Supporters argue it promotes productivity; critics fear price hikes and elite evasion.
Opposition from northern states and informal sector workers highlights regional divides.
Despite the technical elegance of the framework, the public reaction has been anything but calm. From the keyboard warriors to church pulpits, from radio phone-ins to beer parlours, Nigerians are asking the same question in different ways: What exactly is this tax law, and who is it really for? Why now and how will it affect me?
What the New Tax Regime Actually Says
Strip away the noise, and the new tax laws do contain substantial reliefs, at least on paper.
For personal income tax, the headline change is exemption. Individuals earning up to ₦800,000 annually, about ₦66,667 monthly, will pay zero personal income tax. After allowable deductions, those earning up to ₦1.2 million annually are also fully exempt. According to government estimates, this covers roughly 98 per cent of Nigerian workers, including those on the national minimum wage.
For higher earners, the structure is progressive. Rates begin at 15 percent for income between ₦800,001 and ₦3 million and rise gradually to 25 per cent for income above ₦50 million. Compared to the previous regime, this translates to a 60–80 per cent reduction in tax liability for individuals earning up to ₦20 million annually.
Allowable deductions have also been broadened. Pension contributions, National Health Insurance Scheme payments, National Housing Fund contributions, mortgage interest on owner-occupied homes, life insurance premiums and up to 20 per cent of annual rent (capped at ₦500,000) are deductible. Gifts, pensions, gratuities and compensation for job loss up to ₦50 million are tax-exempt.
Crucially, the net is wider. The law explicitly covers freelancers, content creators, remote workers and Nigerians earning income abroad if they are tax residents. Foreign income is taxable only if derived from Nigeria. Bank transfers, deposits and savings are not taxed, unless they generate interest income, a point repeatedly clarified by officials but still widely misunderstood.
On the corporate side, the reforms are pitched as pro-business. Small companies, defined as those with turnover of ₦100 million or less and fixed assets not exceeding ₦250 million, pay zero companies income tax. Startups in priority sectors such as technology and agriculture enjoy full exemptions, while agricultural businesses are tax-free for their first five years.
For larger firms, companies’ income tax falls from 30 percent to 27.5 per cent in 2025, and then to 25 per cent from 2026. Employers can claim additional deductions for salary increases, transport support for low-income staff and new hires retained for at least three years.
Multinational enterprises face tighter rules.
Expanded “nexus” provisions tax non-resident companies on digital services, services provided to Nigerians and gains from shares where more than 50 per cent of value derives from Nigerian assets. A “top-up tax” aligns Nigeria with OECD global minimum tax standards.
On VAT, the rate remains 7.5 per cent, no increase. Small companies with turnover under ₦100 million do not charge VAT. A long list of essentials is zero-rated or exempt: basic food items, educational materials, healthcare and pharmaceuticals, rent, agricultural inputs, disability aids, electric vehicles, baby products, sanitary items and humanitarian supplies. Businesses can claim input VAT refunds on zero-rated supplies.
Capital gains tax exemptions have been expanded to cover the sale of owner-occupied homes, personal items up to ₦5 million, up to two personal cars per year and share gains up to ₦150 million, or ₦10 million if reinvested. Pension funds and charities are exempt. Notably, crypto profits are now explicitly taxable, reflecting the government’s attempt to catch up with digital finance.
Administrative changes include using the National Identification Number (NIN) as Tax Identification Number (TIN) for individuals and CAC numbers for companies. There is no immediate bank account blocking, but financial institutions will require linkage by 2026. Stamp duties are exempted on transfers below ₦10,000, salaries, intra-bank transfers and government securities. Small companies are exempt from the 4 per cent development levy, and 149 pioneer companies retain tax holidays for at least two more years.
On paper, the reforms are sweeping, coherent and, in several respects, generous. So why the panic?
The Trust Deficit
Part of the answer lies not in the text of the law, but in how it emerged.
As a PhD candidate in Development Studies, Tife Owolabi, bluntly puts it, “The government needs to oil the wheels of those managing the process for public documents. This has been a pattern. CAMA, PIA and most recently clemency.
Why is there always a conflict between what is in the public and what is being signed or gazetted?”
Owolabi’s concern touches the raw nerve of the reform: allegations that the versions of the tax laws gazetted differed from what the National Assembly passed.
Former Vice President Atiku Abubakar and the Nigerian Bar Association have both called for immediate suspension of implementation, pending a thorough review. Opposition lawmakers warn of a looming constitutional crisis.
“It doesn’t show any seriousness in governance when these errors keep coming,” Owolabi said, “and doesn’t speak well of a government trying to woo or win the public to its side.”
This is not a minor procedural quibble. In a democracy with fragile institutions, the integrity of the legislative process is everything. Gazetting is meant to formalise what has been debated, scrutinised and approved, not to introduce quiet alterations. Even the perception of executive sleight of hand is corrosive.
Fear of Enforcement and the Banking Question:
If process is one fault line, enforcement is another.
Few aspects of the reform have generated as much fear as the expanded integration between tax authorities and the banking system. Officially, there will be no automatic debits, no arbitrary seizures of savings. Unofficially, Nigerians are unconvinced.
May Ikeora-Amamgbo, a social impact strategist with a doctorate in International Law and experience across fragile and post-conflict states, warned that these fears cannot be dismissed as ignorance. “What we are witnessing is not just a fiscal adjustment,” she said. “It is a renegotiation of power between the Nigerian state and its citizens, taking place at a moment of economic fatigue, institutional distrust, and deep social anxiety.”
She noted that Nigeria’s banking system has a history of unresolved unlawful deductions, delayed reversals and bureaucratic exhaustion. “Many citizens simply abandon claims because the process costs more time and emotional energy than the money lost. Many Nigerians are worried that their bank accounts are no longer private, that savings accumulated over years could suddenly become subject to deductions, and that there is no clear or trusted dispute resolution mechanism if errors occur,” she opined.
“The question Nigerians should be asking,” Ikeora-Amamgbo said, “is not only whether the state has the right to tax, it does, but whether it has earned the trust to do so directly through citizens’ accounts. Nigeria has one of the lowest tax to GDP ratios in the world, estimated at between six and ten per cent, compared to an African average of about 16 per cent and OECD averages exceeding thirty percent. From a purely fiscal perspective, reform is necessary.
The Influencer Trap and Information Collapse
Compounding the problem is a vacuum of authoritative communication. In the absence of clear, simple official explanations, Nigerians have turned to social media influencers, many of whom are ill-equipped to explain complex tax law.
“I recently corrected misinformation under an Instagram post by an influencer attempting to explain the new tax law,” Ikeora-Amamgbo recounted. “The post was confusing, inaccurate and alarmist. Dozens of people asked me what to do, what would happen to their savings, and whether deductions would start automatically.”
Instagram, according to her, “is not a civic classroom. It is an algorithm-driven marketplace of attention. The influencer problem and the collapse of public education. This is the danger of outsourcing public policy education to platforms designed for engagement rather than accuracy.
“The responsibility to explain tax law lies with the state, specifically the Federal Inland Revenue Service.
When that responsibility is displaced onto compensated influencers who do not fully understand the law themselves, misinformation becomes inevitable. In governance research, this is known as informational abdication. When states fail to communicate clearly, unofficial narratives fill the vacuum, often in destabilising ways,” she said.
SMEs, Structure and the Promise of Simplification
From a legal and institutional standpoint, a corporate and tax law expert, Abdulmudallib Salihu Abubakar, in his article made available to The Pointer, argued that the reforms address longstanding structural problems, especially for small and medium-sized enterprises but there still has issues that cannot be overlooked.
“SMEs constitute the backbone of Nigeria’s economy, accounting for an estimated 48 per cent of GDP and 84 percent of employment,” he noted. Yet under the old regime, they faced multiple levies across tiers of government, many without statutory backing, and prohibitive compliance costs.
The new framework, he opined, promises institutional coherence through the Joint Revenue Board, enhanced taxpayer protection through a codified Tax Ombud, and faster dispute resolution via expanded Tax Appeal Tribunal jurisdiction. In theory, this strengthens the social contract.
But Abubakar is not blind to the risks. Federal dominance, funding uncertainties, institutional overlaps and the operational independence of the Ombud all pose challenges. So does the digital divide. Many SMEs and rural taxpayers lack the infrastructure to comply with digitalised administration.
“Overzealous enforcement without procedural fairness definitely risks eroding the legitimacy of the reforms,” he warned.
Speaking on the proposed tax reforms, Mr. Fred Okafor said that Nigerians could benefit from the new tax laws if they are properly structured and fairly implemented. According to him, the reforms represent what many would describe as a bold step towards modernising Nigeria’s fiscal system.
“When we talk about the new tax laws in Nigeria, one will say that they are a bold step toward modernising the country’s fiscal system,” he said.
“What I mean by fiscal system is the framework the government uses, through taxation as revenue and spending as expenditure, to manage its finances. It involves setting tax laws, collecting money, deciding how to spend it, and also managing debt in order to stabilise the economy over business cycles.”
Mr. Okafor explained that the reforms are designed to simplify tax compliance, reduce bureaucratic hurdles, and broaden the tax base, particularly for small businesses and low-income earners. He noted that if properly executed, the new framework could ease pressure on ordinary Nigerians struggling under the weight of inflation.
He described the new tax law as a deliberate effort by the government to cushion the rising cost of living amid persistent inflation.
However, he cautioned that its success would ultimately depend on implementation.
“While the lower corporate tax rate and clearer rules could attract investment, some businesses have warned that additional levies, particularly the development levy, and stricter enforcement mechanisms may increase their overall tax burden,” he noted.
Mr. Okafor stressed that, although the reform has the potential to boost government revenue, transparent execution and sustained public education are crucial to ensuring that its benefits reach everyday Nigerians without placing undue strain on businesses.
“If the government can be fair with the policy, it will benefit every Nigerian,” he added.
On the other hand, Mrs. Tolu Sola expressed strong reservations about the reforms, arguing that they would place an excessive burden on Nigerians, especially those living in remote areas whose primary occupation is farming.
“It will be a burden on Nigerians, especially those in the remote areas whose major occupation is farming,” she said. “I don’t see the ordinary man benefiting from it.”
To illustrate her concerns, Mrs. Sola pointed to informal workers who earn barely enough to survive. “A palm wine tapper who taps just one or two bottles a day may not make more than ₦20,000 in a month,” she said.
“From that money, he feeds his family and takes care of other basic needs. How then do you expect him to pay tax?”
She raised similar concerns about petty traders.
“What about an agidi (corn starch pudding) seller, someone who sells agidi for a living? How can such a person pay tax?” she asked.
Mrs. Sola argued that the government must pay closer attention to the realities of poverty and informal livelihoods across the country. “They should consider the poor as well, not just businessmen and salary earners,” she said. In her view, the proposed reforms risk deepening hardship for vulnerable Nigerians, and she urged the government to reconsider its approach.
“Let it remain the way it has been and find another way to reform the country,” she added.
