By Grace Alegba
Lagos, Dec. 12, 2025 (NAN)
In a landmark announcement, Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has unveiled a comprehensive new tax framework set to take effect in January 2026. Described as a system designed to “empower all Nigerians,” the reforms represent a fundamental shift from a complex, burdensome regime to one focused on incentivizing formalization, protecting the vulnerable, and stimulating broad-based economic growth.
Speaking at a media workshop in Lagos, Oyedele framed the reforms as a necessary correction to a flawed past. “Previous tax policies inadvertently created a web of multiple levies that stifled the informal sector—the very backbone of our economy and development,” he stated. The new philosophy, he explained, is to use the tax code not as a mere revenue tool, but as a strategic instrument for economic structuring and social equity.
Catalyzing the Business Lifecycle: From Nano to Multinational
The core of the business reforms lies in creating a clear, rewarding pathway for growth. The government has introduced significant incentives for registration and structured expansion, aiming to dismantle the perceived disadvantage of formalization.
“If we make life easy for them, the nano becomes micro, micro becomes small, small becomes medium, medium becomes large, and large becomes multinational,” Oyedele elaborated. This vision is backed by concrete measures:
- Zero CIT for Small Businesses: Companies with an annual turnover below ₦100 million will pay a 0% Company Income Tax (CIT).
- Reduced General CIT: The standard CIT rate has been cut from 30% to 25%, aligning Nigeria more competitively with regional peers.
- Beyond Tax Savings: Oyedele stressed that tax benefit is “the icing on the cake.” The greater value for a business is the structure, access to formal credit, government support programs, and contractual legitimacy that come with formal status.
“You now have the motivation to formalize your business because you have tax benefits rather than the disadvantage we used to see,” he said, highlighting a pivotal mindset shift the reforms hope to achieve.
Protecting the Base: Full Exemption for Low-Income Earners
In a major move for income equity, the reforms directly address a historical imbalance. Oyedele revealed that low-income earners, who previously bore 96% of the personal income tax burden, will now receive a full tax exemption. “If you are a low-income earner, you are exempted from paying tax from January next year,” he declared.
This protection is extended further through a Value-Added Tax (VAT) relief on essential items for those earning ₦100,000 or less, cushioning the impact of consumption taxes on basic necessities.
Tackling Multiplicity: Simplifying a Notoriously Complex System
A key driver of the reform is the urgent need to simplify Nigeria’s tax environment, long cited as a major constraint to doing business. “We have one of the highest tax burdens on businesses worldwide. We rank in the top ten,” Oyedele noted, clarifying that this burden stems not from high rates alone, but from the crippling multiplicity and duplication of taxes and collecting agencies.
The new laws promise a sweeping harmonization, eliminating nuisance taxes and creating a clearer, more efficient system. This, coupled with the CIT reduction, is aimed squarely at improving Nigeria’s global competitiveness and attracting Foreign Direct Investment (FDI).
Broader Economic Context and Essential Goods Relief
Oyedele contextualized the reforms within Nigeria’s recent economic struggles, recalling the shocks that pushed the tax-to-GDP ratio below 10% and left the government spending 97% of revenue on debt service. He positioned the difficult measures since mid-2023 as a necessary stabilization package, asserting that Nigeria had narrowly avoided economic collapse and was now on a recovery path rebuilt on investor trust.
He strongly rejected claims of excessive borrowing or net tax increases, pointing instead to a list of cancelled, reversed, or harmonized taxes. Further supporting household welfare, the new law introduces a zero VAT rate on fundamental needs: basic food items, education, healthcare, rental accommodation, and transportation.
In conclusion, Oyedele tied the fate of the nation to the success of its smallest economic units: “If big companies grow by 40 per cent, few will feel it. If the informal sector grows by 2 per cent, all Nigerians feel it.” The 2026 tax reforms, therefore, are presented not just as a fiscal adjustment, but as a foundational strategy for inclusive national growth. (NAN) (www.nannews.ng)
GA/KTO
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Edited by Kamal Tayo Oropo
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