Tax Reform Take-Off: Early Digital Hurdles as New Regime Begins

The first two working days of 2026 were marked by widespread anxiety among Nigerians as salary earners, traders and corporate entities confronted a tax system that has quietly but fundamentally changed.

Public discourse has largely focused on the newly implemented tax regime, with ordinary citizens — particularly low-income earners — raising questions and seeking clarity on how the changes affect them.

With the implementation of Nigeria’s 2025 tax laws, the country has entered what the Federal Government describes as a fairer, broader and more efficient fiscal era. However, as tax portals went live and compliance deadlines drew near, early feedback from businesses and taxpayers suggests that while the take-off has been mostly orderly, the transition is being shaped by learning curves, digital challenges and heightened public scrutiny.

Low-income earners told not to panic

An analysis of the new tax framework shows that low-income earners stand to benefit the most, while higher earners bear increased tax obligations.

Under the revised tax brackets, workers earning a gross annual income of N800,000 or less — about N66,700 monthly — are exempt from income tax. Those earning between N800,001 and N2,999,999 annually are taxed at 15%. For example, an individual earning N850,000 annually is expected to pay N127,000 in tax, translating to about N10,625 monthly.

Middle-level earners with annual incomes between N3 million and N11 million are taxed at 18%. A worker earning N3 million annually would pay N179,100 in tax. Senior-level earners making between N12 million and N24,999,999 are taxed at 21%, while executive earners with incomes between N25 million and N49,999,999 face a 23% rate. Top earners earning N50 million and above are taxed at 25%.

Company tax and VAT unchanged

The Value Added Tax (VAT) rate remains 7.5%, while Company Income Tax (CIT) follows a tiered structure, with small companies taxed at 0% and larger companies at the standard 30%.

What changed with the new tax laws

The reforms are anchored on four key legislations:

• Nigeria Tax Act (NTA) 2025: Consolidates multiple federal tax laws into a single framework.
• Nigeria Tax Administration Act (NTAA) 2025: Harmonises procedures for tax assessment, collection and enforcement.
• Nigeria Revenue Service (Establishment) Act (NRSA) 2025: Replaces FIRS with the Nigeria Revenue Service (NRS), expanding its mandate.
• Joint Revenue Board (Establishment) Act (JRBA) 2025: Enhances coordination across federal, state and local tax authorities and formalises dispute-resolution mechanisms.

Together, the laws aim to modernise Nigeria’s tax system by harmonising overlapping taxes, expanding the tax net without increasing rates, strengthening enforcement, reducing leakages and digitising compliance.

How smooth has implementation been?

Initial implementation has been relatively calm, particularly in Lagos State. Court rulings cleared legal uncertainties, tax authorities rolled out updated digital platforms, and the Federal Government reiterated that the reforms are meant to close loopholes rather than impose new burdens. Large corporates, already familiar with digital systems, appear better prepared for the transition.

Early challenges surface

Despite the orderly start, challenges have emerged. Many small business owners and individuals remain unclear about new filing procedures and deadlines. Users have also reported slow portal response times, registration difficulties and data verification issues.

Opposition parties, labour groups and civil society organisations have raised concerns over transparency in the law-making process, expanded enforcement powers and the timing of implementation amid economic hardship.

Teething problems expected

Financial analysts say the coming months will test the reforms in key areas, including the capacity of tax officials at state and local levels, compliance costs for MSMEs and informal businesses, and consistency in enforcement. Experts warn that without sustained taxpayer education and technical support, resistance could grow.

What Nigerians should expect next

Government officials have promised continuous stakeholder engagement, review of contentious provisions, improved digital infrastructure and stronger taxpayer support. For Nigerians, the real test will be whether the reforms deliver fairer taxation, reduced harassment and visible public benefits.

Nigeria’s 2025 tax laws represent one of the most ambitious attempts in decades to fix a weak revenue system. While the take-off may not be flawless, analysts say success will depend on execution, transparency and public trust.

Key things Nigerians should know

• No new tax rates, but a wider tax net.
• Digital compliance is now central, with tighter data integration.
• Tax authorities have stronger enforcement powers.
• MSMEs may feel compliance pressure first.
• A transition period is expected, with initial emphasis on education rather than punishment.

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