Lately, conversations about Nigeria’s new tax laws have sounded like the kind of arguments parents have during PTA meetings; everyone is talking, but no two people seem to agree on what was actually decided. Some say taxes are going up, others insist they are coming down, and many Nigerians are simply confused about what the changes truly mean for their daily lives. That confusion is exactly why we decided to simplify everything in this article.
Think about taxes the same way you think about school fees or community contributions. Everyone puts in a little money so shared needs can be taken care of; roads can be fixed, hospitals can function, and schools can stay open. In June 2025, Nigeria changed how this contribution system works, hoping to make it clearer and fairer than before.
These changes affect everyone: workers, families, traders, small business owners, and even big companies. The old tax system was complicated, uneven, and often misunderstood. The new laws aim to fix that. We’ve broken it all down simply, so simple that even a 12-year-old could understand.
What Exactly Changed? The Four New Tax Laws
In June 2025, President Bola Tinubu signed four new tax laws that now sit at the centre of how taxes work in Nigeria. Rather than introducing entirely new taxes, these laws mostly focus on reorganising, simplifying, and correcting a system that many Nigerians already find confusing and unfair. Think of it as cleaning up a very messy cupboard. Nothing magical was added, but everything was rearranged so people can finally see what is inside and where things belong.
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1. The Nigeria Tax Act (NTA)
The NTA brings many scattered tax rules into one clearer framework. Before now, tax laws were spread across different documents, amendments, and interpretations, making it difficult for individuals and businesses to know exactly what applied to them. This law puts major tax provisions in one place, using more consistent definitions and fewer grey areas. In simple terms, it sets the rules and explains who should pay what.
2. Tax Administration Act
This focuses on how taxes are collected and managed. It outlines processes for registration, filing, payment, and enforcement, replacing vague practices with clearer procedures. This law is meant to reduce confusion, delays, and arbitrary decisions by tax authorities.
3. The Nigeria Revenue Service Act
This replaces the Federal Inland Revenue Service (FIRS) with a new body called the Nigeria Revenue Service. This change is not just about a new name. The law expands responsibilities, strengthens oversight, and aims to make tax collection more transparent and professional.
4. The Joint Revenue Board Act
The Joint Revenue Board Act improves coordination between federal, state, and local tax authorities. Instead of overlapping demands and duplicated taxes, government offices are expected to work together under shared guidelines. The idea is simple: same rules, clearer instructions, and fewer confusing taxes for Nigerians to deal with.
What This Means for Ordinary People and Families
For many Nigerians, the most important question is simple: how does this affect my pocket?
Under the new tax laws, ordinary workers and families are among the biggest beneficiaries. One of the clearest changes is in personal income tax. If you earn ₦800,000 or less in a year, you now pay zero income tax. In addition, the law allows a rent relief of ₦200,000, which is removed from your income before tax is calculated. This means that even people earning slightly above the threshold may still fall into the “no tax” category once reliefs are applied.
Another major relief comes from changes to Value Added Tax, commonly known as VAT. VAT is the extra amount added to the price of goods and services when you buy them. Under the new laws, VAT is now set at zero percent on essential items that households spend money on every day. These include basic food items, medicines, healthcare services, school fees and books, electricity, and baby products. By removing VAT from these essentials, the government aims to reduce the everyday cost of living.
The impact of these changes shows up in small but important ways. Parents spend less to feed and educate their children, families find it slightly easier to cope with inflation, and low-income earners are no longer forced to choose between paying tax and meeting basic needs. If you earn little and spend most of your money on basics, these laws were written with you in mind.
What This Means for Small Businesses and Traders
Small businesses and traders sit at the heart of Nigeria’s economy, and the new tax laws make deliberate efforts to ease the pressure they face. Under the law, a small business is generally defined as one earning between ₦50 million and ₦100 million or less in a year. For businesses within this range, the tax burden is significantly lighter than before.
Most importantly, these businesses are no longer required to pay Company Income Tax, Capital Gains Tax, or the newly introduced Development Levy. Tax filing has also been simplified, and there is no longer a mandatory requirement to submit audited financial accounts. This is a major shift for informal operators who often struggled with complex paperwork they could not afford to handle properly.
The Development Levy itself is a 4 percent charge introduced for larger companies. It replaces several old and overlapping levies that made tax compliance difficult and unpredictable. Small businesses are completely exempt from this levy, meaning they are shielded from yet another layer of financial obligation.
For market sellers, tailors, food vendors, online sellers, and artisans, these changes are practical and meaningful. With fewer taxes and clearer rules, business owners face less harassment, feel safer registering their businesses, and can focus more on surviving and growing in a tough economic climate.
Who Pays More Now and Why?
While many Nigerians enjoy lower taxes, the new laws also make sure that wealthier individuals and larger companies pay their fair share. For companies, the Capital Gains Tax has increased from 10% to 30%, meaning that profits from selling assets or shares are more heavily taxed. Rich individuals now face higher income tax rates, up to 25%, depending on how much they earn. Multinational companies operating in Nigeria are required to pay a minimum effective tax of 15%, ensuring that huge global businesses contribute fairly to the country.
Luxury goods and premium services are also now subject to higher VAT, so spending on expensive items contributes more to government revenue. The logic is simple: those who earn more and spend more should contribute more. At the same time, essential goods and services remain protected, ensuring that ordinary households are not burdened. These changes aim to make the system fairer, balancing relief for the poor with responsibility for the wealthy.
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How Tax Collection Is Changing
The way Nigeria collects taxes is also changing to make the process fairer and more transparent. The Federal Inland Revenue Service (FIRS) has been replaced by the Nigeria Revenue Service (NRS), a new independent body that enforces tax rules across federal, state, and local levels. With this change, overlapping taxes are reduced, and businesses and individuals can expect a more consistent system.
New protections have been introduced to help taxpayers. The Tax Ombudsman allows people to report unfair treatment, while the Tax Appeal Tribunal can resolve disputes efficiently. For medium and large businesses, e-invoicing, or digital receipts, will track Value Added Tax (VAT) properly and reduce errors. Small traders are not immediately affected by this, so their daily operations remain simpler.
The key idea is more transparency and less guesswork. If businesses and individuals understand the system, there should be fewer excuses for harassment and confusion, at least in theory.
So, Is This a Good Thing?
On paper, these tax changes make Nigeria fairer and easier to navigate. Low earners may pay nothing, families will spend less on essentials, and small businesses enjoy relief from confusing taxes. At the same time, big companies and wealthy individuals pay more, helping the government fund public services like roads, schools, and hospitals.
Of course, laws alone do not guarantee results. The success of these reforms depends on how well they are implemented. Clear rules and transparency are a step forward, but trust and consistency will be key.Taxes should not scare people. When you understand them, you are harder to cheat and easier to protect.
Stay informed, and follow RefinedNG for practical guides on how these changes may affect your household or business, and don’t let confusion cost you a naira.