On June 26, 2025, President Bola Ahmed Tinubu signed into law four significant tax reform bills collectively referred to as “the Reform Acts.” The first, the Nigeria Tax Act (NTA) also called the Ease of Doing Business Act seeks to streamline the country’s previously fragmented tax regulations. Complementing this is the Nigeria Tax Administration Act (NTAA), which seeks to harmonize legal and operational procedures for tax administration across all levels of government: federal, state, and local. The third, the Nigeria Revenue Service Act (NRSA), replaces the existing Federal Inland Revenue Service Act and establishes a more autonomous, performance-driven national tax authority called the Nigerian Revenue Service. Lastly, the Joint Revenue Board Act (JRBA) creates a formal governance structure to improve coordination and cooperation among tax authorities nationwide. These reforms represent one of the most extensive restructurings of Nigeria’s tax system in decades and are set to take effect on January 1, 2026.
The reforms are designed to streamline compliance, promote fairness, and boost revenue collection, while fostering economic growth. At the same time, these new laws signal the beginning of a more complex regulatory environment—marked by increased scrutiny and the need for strategic adjustments by businesses operating in Nigeria. Here’s what technology, fintechs, healthtechs/life sciences & media/creative arts entrepreneurs and business owners should know.
Consolidation, Repeal, and Update of Nigeria’s Tax Laws
As part of the broader goals of the Nigerian Tax Reforms, the NTA consolidates key fiscal laws into one cohesive framework. It repeals and integrates the core provisions of several major tax statutes, including the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Stamp Duties Act, and Value Added Tax Act. Additionally, it introduces amendments to other important laws such as the Petroleum Industry Act and the Tertiary Education Trust Fund (Establishment, etc.) Act. One notable change is the revocation of the 2021 VAT (Modification) Order. The overarching aim is to simplify Nigeria’s tax landscape, reduce redundancies, and promote clarity for businesses navigating the tax environment.
Creation and Role of the Nigeria Revenue Service (NRS)
A significant institutional shift introduced by the reforms is the replacement of the Federal Inland Revenue Service (FIRS) with a newly established Nigeria Revenue Service (NRS). This development, formalized through the NRSA, marks the beginning of a more autonomous and efficiency-driven tax authority. The NRS not only assumes responsibility for tax collection but is also tasked with overseeing the administration of non-tax revenue. The agency is expected to introduce a standardized legal and administrative approach across the country to ensure consistency and improve compliance in revenue collection.
The New Tax Landscape for Businesses
For businesses, several changes will reshape how taxes are paid and managed. A key update is the introduction of a tax on profits from foreign subsidiaries that could have been paid out as dividends but weren’t, affecting Nigerian companies with overseas operations.
Another major shift involves Value Added Tax (VAT). While the rate remains unchanged at 7.5%, the rules around recovery of VAT have been expanded. Businesses can now recover VAT on all purchases, including services and fixed assets, as long as they relate to taxable sales. This reduces costs for businesses offering respite for many companies by lowering overall operating costs.
Additionally, certain essential items i.e goods and services such as basic food, medical products, educational materials, electricity, and non-oil/gas exports are now zero-rated for VAT, meaning businesses selling these can recover VAT costs, improving cash flow and cost savings.
What Individuals and Employers Should Watch
On the individual side, the government has toughened penalties for tax non-compliance. Failing to file tax returns now comes with steeper penalties- ₦100,000 for the first month rising to ₦530,000 in the second month. This puts pressure on both individuals and businesses to meet deadlines and maintain accurate records.
To make dispute resolution easier, a new Tax Ombuds Office has been established. This independent body will help resolve issues between taxpayers and the tax authorities, providing a more accessible avenue for raising concerns and ensuring fairness in enforcement.
Restructuring and Strategic Planning
Companies considering restructuring or expansion—especially those with international operations—should revisit their tax strategy. The new Controlled Foreign Company rules mean that previously untaxed profits abroad may now trigger tax in Nigeria. Businesses with foreign subsidiaries should evaluate how the new tax on undistributed profits impacts financial planning and corporate structure
Additionally, businesses should take advantage of VAT recovery or zero-rated items and review supply chains for compliance.
Administrative Changes and Compliance
The tax administration system is also undergoing structural reform. The Federal Inland Revenue Service (FIRS) has been renamed the Nigeria Revenue Service (NRS), reflecting its enhanced role. Meanwhile, state-level tax agencies are now autonomous, allowing for improved local tax collection and coordination.
The VAT revenue-sharing model has also shifted. The federal government will now receive 10% of VAT revenue, down from 12%, while states will receive 55% and local governments 35%. These adjustments are designed to strengthen local governance and, potentially, improve infrastructure and services that benefit businesses.
A particularly impactful update is the requirement for all businesses to adopt electronic invoicing. This measure is part of a broader push for transparency and digital compliance. To remain compliant, companies will need to update their accounting systems and ensure they meet the new digital standards.
Industry-Specific Impacts
In the financial services sector, the expanded VAT recovery rules are especially beneficial. Banks, insurance firms, and fintech startups can now claim back VAT on purchases that support taxable services, helping reduce overall costs. However, compliance is more critical than ever, with steep penalties for missed filings. The Tax Ombuds Office could prove particularly useful for resolving disputes in this highly regulated industry.
For life sciences and healthcare, the reforms bring immediate cost relief. Medical goods and pharmaceutical products are now zero-rated for VAT, allowing businesses to recover input VAT and make healthcare more affordable. It’s vital for companies in this space to update their tax processes to take full advantage of the changes.
Technology and media companies also stand to benefit. Many digital exports are now zero-rated for VAT, which supports firms serving international markets. The mandatory adoption of e-invoicing aligns well with tech operations but still requires system upgrades and staff training to stay compliant.
Taking Action: What Businesses Should Do Next.
To navigate these changes effectively, businesses should begin by aligning their leadership, operations, and finance teams around a shared understanding of the implications. Key steps include:
- Conducting training sessions and strategic reviews to stay current with the evolving tax landscape. It’s also essential to assess the impact on your company’s structure, supply chains, and financial arrangements.
- Updating the tax strategy to take advantage of opportunities such as VAT recovery.At the same time, enhance compliance by modernizing accounting systems—especially for electronic invoicing—to meet new reporting and regulatory requirements.
- Embracing technology as a critical enabler. Use tools that not only comply with current regulations but are also adaptable to future changes. A robust tax risk management framework will help identify both compliance gaps and potential efficiencies.
Finally, businesses should stay actively informed. Monitor government updates, tax circulars, and implementation guidelines regularly. While the Tax Ombud’s Office provides support, early engagement and proactive compliance remain the most effective ways to minimize both risk and cost.
Final Thoughts
Nigeria’s new tax laws mark a bold step toward modernising the country’s tax system. They create both challenges and opportunities for businesses. Those that take the time to understand the changes, update their systems, and plan ahead will be well positioned to thrive in the new environment commencing in six months time.
Author
Adeola Osifeko LLB,LLM,ACIS,ABR, Principal Partner. She can be reached on adeola@aeolawpractice.com
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