Nigeria Tax Reform 2025: Offences, Penalties, FAQs, and What the New Law Means for Businesses, Individuals, and Investors

Nigeria Tax Reform 2025 represents the most comprehensive update to Nigeria’s tax structure in recent years, introducing simplified levies, clearer compliance rules, and stronger enforcement mechanisms. Yet despite its significance, many Nigerians still lack accurate information about what has changed, who is affected, and what offences or penalties now apply under the new law, leading to widespread assumptions and misinformation.

On June 26, 2025, President Bola Ahmed Tinubu signed into law four groundbreaking tax reform Acts that will reshape how Nigerians pay, report, and understand taxes. This reform — the most ambitious in decades — aims to simplify tax administration, reduce burdens on low-income earners, promote business growth, and unify the country’s fragmented tax system.

According to the Presidential Fiscal Policy & Tax Reforms Committee, these reforms were enacted after months of nationwide consultations and detailed reviews.

For official copies of the laws, you can check the Presidential Fiscal Policy and Tax Reforms Committee website, where they were published in the official gazettes.

This publication provides a clear, professionally verified breakdown of Nigeria Tax Reform 2025, including its goals, offences and penalties, frequently asked questions, compliance responsibilities, and what individuals, businesses, and investors must understand moving forward. All details are based strictly on verified government sources, including the Presidential Fiscal Policy & Tax Reforms Committee, the Federal Inland Revenue Service (FIRS), the Federal Ministry of Finance, the Joint Tax Board (JTB), and the Ministry of Justice.

The Nigeria Tax Reform Acts 2025 Explained

The Federal Government has officially gazetted four interconnected Acts, each addressing a major flaw in Nigeria’s current tax environment.
Check 👉 Government Gazette Summary

1. Nigeria Tax Act (NTA) 2025

This Act consolidates scattered tax laws into one modern, readable document. Instead of juggling multiple Acts — CIT, VAT, PPT, CGT, etc. — Nigerians can now refer to a single tax law framework. The goal is clarity, simplicity, and reduced compliance stress.

2. Nigeria Tax Administration Act (NTAA) 2025

This Act standardizes tax processes nationwide and transitions Nigeria toward digital tax administration. It sets a unified rulebook for registration, filing, payments, audits, penalties, and taxpayer rights.

3. Nigeria Revenue Service (Establishment) Act (NRSA) 2025

This law transforms the Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service (NRS) — a stronger, fully digital agency with expanded powers to coordinate tax revenue and reduce leakages.

4. Joint Revenue Board (Establishment) Act (JRBA) 2025

For the first time, federal, state, and local tax authorities will work together under a structured Joint Revenue Board. This reduces double taxation, multiple taxation, and inconsistent assessments across states.

Nigeria’s 2025 Tax Reform Act: 50 Official Tax Reliefs and Exemptions Starting January 1, 2026

The government’s official guidance on Tax Reform Act 2025 outlines 50 exemptions across Personal Income Tax, VAT, Stamp Duties, Withholding Tax, Development Levy, and more.

These reforms provide relief for:

• Low-income workers

• SMEs and micro-businesses

• Start-ups, tech companies, and investors

• Agriculture, manufacturing, and export businesses

• Retirees and pensioners

FIFTY (50) TAX EXEMPTIONS AND RELIEFS THAT WILL BENEFIT THE MASSES UNDER THE NEW TAX REFORM LAWS EFFECTIVE FROM 1 JANUARY 2026

From 1 January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses including:

Personal Income Tax or PAYE

1. Individuals earning the national minimum wage or less (exempt)
2. Annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) is exempt
3. Reduced PAYE tax for those earning annual gross income up to ₦20 million
4. Gifts (exempt)

Allowable Deductions & Reliefs for individuals

5. Pension contribution to PFA
6. National Health Insurance Scheme
7. National Housing Fund contributions
8. Interest on loans for owner-occupied residential housing
9. Life insurance or annuity premiums
10. Rent relief – 20% of annual rent (up to ₦500,000)

Pensions & Gratuities – Exempt

11. Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
12. Pension, gratuity or any retirement benefits granted in line with the PRA
13. Compensation for loss of employment up to ₦50 million

Capital Gains Tax (CGT) – Exempt

14. Sale of an owner-occupied house
15. Personal effects or chattels worth up to ₦5 million
16. Sale of up to two private vehicles per year
17. Gains on shares below ₦150 million per year or gains up to ₦10 million
18. Gains on shares above exemption threshold if the proceed is reinvested
19. Pension funds, charities, and religious institutions (non-commercial)

Companies Income Tax (CIT) – Exempt

20. Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax
21. Eligible (labelled) startups are exempt
22. Compensation relief – 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers
23. Employment relief – 50% deduction for salaries of new employees hired and retained for at least three years
24. Tax holiday for the first 5-years for agricultural businesses (crop production, livestock, dairy etc)
25. Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators

Development Levy – Exempt

26. Small companies are exempt from 4% development levy

Withholding Tax – Exempt

27. Small companies, manufacturers and agric businesses are exempt from withholding tax deduction on their income
28. Small companies are exempt from deduction on their payments to suppliers

Value Added Tax (VAT) – 0% or Exempt

29. Basic food items – 0% VAT
30. Rent – Exempt
31. Education services and materials – 0% VAT
32. Health and medical services
33. Pharmaceutical products – 0% VAT
34. Small companies (≤ ₦100m turnover) are exempt from charging VAT
35. Diesel, petrol, and solar power equipment – VAT suspended or exempt
36. Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services
37. Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals
38. Purchase, lease or hire of equipment for agric purposes
39. Disability aids – hearing aids, wheelchairs, braille materials
40. Transport – shared passenger road transport (non-charter)
41. Electric vehicles and parts – exempt
42. Humanitarian supplies – exempt
43. Baby products
44. Sanitary towels, pads or tampons
45. Land and building

Stamp Duties – Exempt

46. Electronic money transfers below ₦10,000
47. Salary payments
48. Intra-bank transfers
49. Transfers of government securities or shares
50. All documents for transfer of stocks and shares

All exemptions listed here are taken directly from the official tax reform guidance published by the government. Click here to read more!

What the Tax Reform Act 2025 Mean for Businesses, Individuals, and Investors

For Individuals and Workers

• Many low-income earners will now fall below taxable thresholds.

• Pension, gratuities, and certain welfare benefits receive expanded exemptions.

• Tax filing will become simpler with clear digital processes.

For SMEs and Small Business Owners

• Certain micro-businesses may now pay 0% tax under clarified exemption thresholds.

• Simplified filing and unified tax rules reduce compliance costs.

• Multiple taxation across states is expected to drop significantly.

For Investors and Startups

• Venture capital, tech innovation, and export-driven businesses enjoy targeted reliefs.

• A more predictable tax climate improves investor confidence.

• Harmonized rules reduce legal uncertainties and administrative delays.

What Is Nigeria Tax Reform 2025 All About?

In 2023, the Federal Government inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele, to overhaul Nigeria’s complicated tax structure.
The committee’s mandate is documented on the Federal Ministry of Finance official website (Fiscal Policy & Tax Reforms Committee page).

The reform aims to:

• Eliminate confusing and overlapping levies

• Improve fairness and transparency

• Support business growth, especially SMEs

• Strengthen economic stability

• Reduce the cost of tax compliance

These efforts produced a simplified framework commonly referred to as Nigeria Tax Reform 2025.

Key Highlights of Nigeria Tax Reform 2025 (Explained Simply)

One of the most important changes is the merging of multiple federal levies into a single charge called the Development Levy.

What the Development Levy Replaces

Instead of paying several different levies, businesses will now pay one consolidated levy, replacing previous charges such as:

• NASENI Levy

• Police Trust Fund Levy

• IT/Tech Levy

• Some components of the Tertiary Education Tax

Businesses will now pay this consolidated levy when filing annual tax returns through the Federal Inland Revenue Service (FIRS).
You can confirm the process on the official FIRS portal.

The objective is not to increase taxes but to simplify them.

Who Must Pay Under Nigeria Tax Reform 2025?

1. Registered Companies Earning Taxable Profit

Medium and large companies fall under the consolidated levy structure.

2. Small Companies

Small companies may be exempt if they fall below thresholds defined under the Companies Income Tax Act (CITA).
Details can be confirmed on the FIRS – Companies Income Tax page. (If this specific page redirects, use main FIRS site navigation.)

3. Non-profit Associations & Community Groups

Town unions, social clubs, cultural groups, and non-profits are not taxed, except when they operate commercial businesses.

If they earn profit, they must comply like any business. If not, they remain exempt.

Tax Identification Number (TIN): Who Needs It?

You need a Tax Identification Number (TIN) if you:

• Run a registered business

• Are self-employed

• Need to file taxes independently as an entity

TIN registration is free and can be done via the Joint Tax Board (JTB) TIN Portal. You can apply online via the Joint Tax Board portal

If you work under PAYE (Pay As You Earn) through an employer, you typically do not need a separate TIN.

For more info, visit the official source here

How Will the New Development Levy Be Collected?

Many Nigerians fear that the government will begin deducting tax directly from their bank accounts.
This is false.

Important Clarification:

• ❌ No automatic bank deductions

• ✔️ Companies calculate and pay the levy during annual tax filings

• ✔️ Payments are made only through approved channels on the FIRS platform

Tax payments are handled through official systems such as TaxProMax, available on the FIRS website.

Practical Steps Businesses Should Take Now Under Tax Reform Act 2025

To comply with Nigeria tax reform 2025, businesses should:

1. Confirm if they earn taxable profit.

2. Register for a free TIN on the JTB TIN Portal.

3. Maintain clean financial records throughout the year.

4. File annual tax returns correctly via FIRS TaxProMax.

5. Follow verified updates only from:

      • Fiscal Reforms Portal

      • FIRS

      • Federal Ministry of Finance

      • Ministry of Justice Gazettes

Offences and Penalties Under the Nigeria Tax Reform 2025

From the Official National Tax Acts Amendment / Gazette), all offences and penalties below are verified directly from official government websites: Federal Inland Revenue Service (FIRS), Federal Ministry of Finance / Fiscal Reform & Policy Coordination Office – Official Nigeria Tax Law Acts (CITA, PITA, VAT Act) via FIRS Publications & Gazettes.

The Nigeria Tax Reform 2025 introduces strengthened compliance rules intended to improve transparency, reduce evasion, and modernize tax administration nationwide. Below are key offences and their corresponding penalties as provided in the applicable amended Acts and FIRS-administered legislation.

1. Failure to File Tax Returns (Companies Income Tax Act – CITA, Section 55)

Any company that fails to file its annual tax returns within the statutory filing period is liable to a financial penalty. The penalty generally includes a fixed fine plus daily accruing charges until compliance is achieved.

2. Failure to File Personal Income Tax Returns (Personal Income Tax Act – PITA, Section 41)

Individuals who do not file their annual tax returns commit an offence and may face monetary penalties as prescribed by the Act. The penalties are designed to enforce voluntary compliance.

3. Failure to Keep Proper Accounting Records (Tax Administration Provisions Across Acts)

Businesses that fail to maintain accurate books of account risk penalties, which may include fines or additional assessments. Proper record-keeping is mandatory for audit and verification.

4. Submission of False or Misleading Information (FIRS Enforcement Framework)

Providing false declarations, forged documents, or misleading information to the Federal Inland Revenue Service constitutes an offence. Penalties may include heavy fines in addition to potential prosecution.

5. Obstruction of Tax Officers (FIRS Act, Sections on Enforcement)

Any person or business that obstructs, assaults, or interferes with authorised FIRS officers during inspections, audits, or enforcement exercises is subject to strict penalties, which can include fines and prosecution.

6. Failure to Deduct or Remit Withholding Tax (WHT) (CITA Section 78; PITA WHT Provisions)

Organizations that fail to deduct or fail to remit withholding tax to the government within the prescribed time commit an offence. Penalties include fines calculated based on the value of unremitted tax.

7. VAT Non-Compliance: Failure to Charge, Collect, or Remit VAT (Value Added Tax Act – VAT Act, Sections 10 & 15)

Businesses that do not charge VAT, that under-collect, or that fail to remit VAT within the stipulated period are liable to statutory penalties. Fines may escalate depending on the duration of non-compliance.

8. Late or Non-Payment of Taxes Due (Applicable Across All Acts)

Failure to pay assessed taxes by the due date attracts interest charges, penalties, and enforcement actions, including possible distraint (seizure of property).

9. Failure to Register for Tax When Required (FIRS Act and VAT Act Registration Provisions)

Businesses and individuals who are required to register—for example, for VAT or corporate tax—commit an offence if they delay or refuse to register. Penalties include monetary fines and enforcement action.

10. Tax Evasion (Criminal Offence Under Multiple Acts)

Deliberate attempts to evade taxes—such as hiding income, falsifying accounts, or operating without tax registration—constitute criminal offences. Penalties can include very heavy fines and, in serious cases, imprisonment.

The law covers many other offences beyond these (e.g., stamp-duty abuses, false declarations, fraud, impersonation of officers, non-compliance by virtual-asset service providers (VASPs), etc). You can consult the official gazette (PDF version of NTAA 2025 for a full, authoritative list.

Frequently Asked Questions (FAQs) About Nigeria Tax Reform 2025

Below are answers from verified sources based strictly on government laws and platforms such as FIRS, JTB, Finance Ministry, and the Personal Income Tax Act (PITA).

Q1. Must every individual file tax returns and pay tax?

Ans: No. Under the Personal Income Tax Act (PITA), only individuals who earn taxable income (employment income, business income, or freelance income) are required to file taxes.
Verification: Check the “Taxable Persons” section on the official FIRS Personal Income Tax page.

Q2. What is the age bracket for taxable individuals?

Ans: PITA applies to all adults who earn taxable income, typically from age 18 and above, because that is the legal working age in Nigeria.
Verification: Refer to PITA guidelines through the FIRS website.

Q3. Are unemployed youths expected to pay tax?

Ans: No. You only pay tax if you earn taxable income.
Unemployed individuals are not taxable.
Verification: Confirm on FIRS – Personal Income Tax.

Q4. When is tax payment done — end of the year or anytime?

Ans:
For individuals:

PAYE workers: Tax is deducted monthly by employers (PITA guidelines).

Self-employed individuals: Tax is paid annually, but you may also make payments during the year, depending on your income pattern.
Verification: FIRS – PIT Guidelines.

For companies:
Tax is paid annually when filing returns through FIRS TaxProMax.

Q5. Can taxes be paid in instalments?

Ans: Yes.
FIRS allows instalment payments under certain conditions, especially for self-employed persons or businesses facing financial strain.
Verification: See the instalment payment guidance on the FIRS portal (Tax Administration Procedures).

Q6. Where should tax be paid — banks or FIRS offices?

Ans:
Payments can be made through:

• FIRS TaxProMax online

• Authorized commercial banks integrated with the FIRS system

Verification: Payment instructions are available on the FIRS – How to Pay Taxes page.

Q7. Will taxpayers receive a receipt or certificate?

Ans: Yes!
FIRS issues electronic receipts and tax clearance certificates (TCC) upon successful payment and filing.
Verification:
Visit the FIRS TCC Portal (accessed via the official FIRS website).

Q8. Are entrepreneurs, freelancers, petty traders, creators, contractors, and students required to pay tax?

Ans: Only if they earn taxable income under PITA.
Examples of taxable individuals include:

• Digital content creators, SMEs, Artisans

• Freelancers, influencers

• Traders

• Business owners

• Contractors

• Self-employed persons

Students with part-time businesses or earnings must pay tax on income.
Verification: FIRS – Personal Income Tax.

Q9. Are Free Trade Zones still protected?

Ans: Yes. Official guidance confirms FTZ operators retain their incentives under the new unified legislation.
(Source: fiscalreforms.ng — clarifications section)

Q10. Will taxpayers get new TIN formats?

Ans: The new NTAA harmonizes identification systems, paving the way for a unified taxpayer digital ID.

Q11. Is VAT changing?

Ans: VAT remains at 7.5%, but the exemption list is now clearer and better structured.

Q12. Does Development Levy affect everyone?

Ans: No. Thresholds and exemptions apply — full details are taken from the government’s published guidance.

📚 Further Readings & References On FAQs’ Answers

These are the official pages FAQ section references:

• FIRS Personal Income Tax page

• PITA guidelines (via FIRS website)

• FIRS – PIT Guidelines

• FIRS portal (Tax Administration Procedures)

• FIRS – How to Pay Taxes page

• FIRS TCC Portal
(Official tax clearance certificate portal)

Why Nigeria Tax Reform 2025 Reform Matters

Nigeria tax reform 2025 aims to:

• Simplify tax payment

• Reduce multiple levies

• Improve transparency

• Support small businesses

• Encourage economic growth

• Align with global taxation standards

A clear understanding of the reform helps Nigerians avoid misinformation and become fully compliant.

If you operate a business, here’s what to do next:

1. Confirm whether your business earns taxable profit.

2. Register for a free TIN if you do not have one.

3. File your annual returns correctly through FIRS.

4. Follow only verified government sources to avoid misinformation.

Conclusion

Nigeria’s tax reform represents a major shift towards a simpler, fairer, and more structured national tax system. While further updates may follow, staying informed through verified government platforms remains the safest approach.

At MikeTech Hub, we remain committed to delivering accurate, accessible, and professionally verified information to all Nigerians.

Disclaimer

The information provided in this article is based on independent research and publicly verified data obtained from official government websites, including the Federal Inland Revenue Service (FIRS), the Fiscal Reforms Committee, the Ministry of Finance, the Joint Tax Board (JTB), and the Ministry of Justice.
It is intended for general awareness only and should not be considered professional tax or legal advice.

Readers are strongly encouraged to:

• Consult a certified tax practitioner or legal expert for personalized guidance, and,

• Visit official government websites for the most accurate and up-to-date information on the Nigeria Tax Reform Act 2025.

For Official Inquiries About Nigeria’s 2025 Tax Reform Act, Get In Touch:

Abuja

1. The Presidency
Aso Rock Villa, Asokoro, FCT Abuja

2. Federal Inland Revenue Service (FIRS Headquarters)
Revenue House, 15 Sokode Crescent, Wuse Zone 5, FCT Abuja

Lagos

Fiscal Reform Committee Office
Floor 7, Mulliner Towers,
39 Alfred Rewane Road, Ikoyi, Lagos

Official Contact:

Phone: 0810 975 3151
Email: enquiries@fiscalreforms.ng
Website: www.fiscalreforms.ng

✍️ By Michael Okolike
Digital Media Strategist | Published via MikeTech Blog

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