Highlights and Implications of the Nigeria Tax Act 2025 signed by President Tinubu

June 27, 2025 BusinessTrumpet

It is no longer news that Nigeria now has a Nigeria Tax Act 2025 passed by both houses of parliament and signed into law by the President, Bola Ahmed Tinubu. But what are the highlights of this new tax act for income earners, businesses and on transactions?

The President said that “The tax reforms will protect low-income households and support workers by expanding their disposable income,” as they will create a fairer and more efficient tax system across the country. In a tweet on X, the Prewsident said

“Earlier, I signed into law four historic tax and fiscal bills at the Aso Villa, marking a new dawn in Nigeria’s economic governance. These new laws simplify our tax regime and deliver Nigeria’s first major, pro-people tax cuts in a generation. They also provide targeted relief for low-income earners, small businesses, and working families across the country. The following Acts will now be gazetted as laws of the Federal Republic of Nigeria: – The Nigeria Tax (Fair Taxation) Act – The Nigeria Tax Administration Act – The Nigeria Revenue Service (Establishment) Act – The Joint Revenue Board (Establishment) Act Implementation will commence effective January 1, 2026. God bless the Federal Republic of Nigeria”. ~ President Bola Tinubu President of the Federal Republic of Nigeria @NigeriaGov @NGRPresident

The new Nigeria Tax Act will come into effect from January 1, 2026

Highlight 1: The New Nigeria Tax Act

The tax reform initiated by the Presidency and approved by the National Assembly is actually made up of four different but related acts, and they

The New Nigeria Tax Act: The New Nigeria Tax Act consolidates various regulations into a single, more comprehensible Tax act while abolishing over 50 minor, redundant taxes. The presidency stated that by decreasing the number of taxes and removing duplications, it will facilitate business operations.
The Tax Administration Act: The Tax Administration Act establishes uniform guidelines for tax collection across federal, state, and local governments.
The Nigeria Revenue Service Act: The replaces the Federal Inland Revenue Service (FIRS) with a new, autonomous agency known as the Nigeria Revenue Service (NRS).
The Joint Revenue Board Act: enhances coordination among different levels of government and establishes a Tax Ombudsman and Tax Appeal Tribunal to address disputes.

Highlight 2: Potential Impact of the New tax Acts

PAYE and Personal Income Tax under the New Tax Act

For individuals earning up to 1 million naira annually, a rent relief of 200,000 naira will be implemented, effectively lowering their taxable income to N800,000 naira. Consequently, they will be exempt from paying income tax. So, if your earn below N800,000 per annum you will no longer pay income tax in Nigeria
For individuals with incomes ranging from N3 million to N12 million, the initial N3 million incurs a tax of N330,000, while the subsequent N9 million is subject to an 18% tax rate. This 18% results in an additional N1,620,000. Consequently, those at the upper end of this tax bracket will owe a total of N1,950,000.
For individuals earning between N12 million and N25 million, the first N12 million is taxed at N1,950,000, and the following N13 million is taxed at a rate of 21%. This results in an additional N2,730,000, culminating in a total tax liability of N4,680,000.
For those with earnings between N25 million and N50 million, the initial N25 million is taxed at N4,680,000, while the next N25 million is taxed at 23%. The 23% tax adds N5,750,000, leading to a total tax obligation of N10,430,000.
Ultimately, individuals with an income exceeding N50 million are required to pay N10,430,000 on the initial N50 million, in addition to 25% on any amount that surpasses this threshold.
With the recent tax reforms, every employee, irrespective of the type of income, is now required to submit an annual tax return that encompasses all sources of earnings, not solely their salary.
This implies that individuals are also obligated to report income derived from freelance work, rental properties, side businesses, dividends, and any other type of non-employment income.

TAX ID under the New Tax Act

The interpretation of the tax reform legislation necessitates that all Nigerians possess a tax identification profile. As stipulated in the bill, having a tax identification will be a prerequisite for numerous routine transactions.
In order to open or maintain a bank account, enter into a contract with a government agency, or utilize financial services such as insurance and stock trading, it is mandatory to present a tax ID.
Furthermore, tax authorities are authorized to automatically assign tax IDs to eligible individuals who do not register voluntarily, effectively eliminating the option to evade tax obligations.

VAT under the New Nigeria Tax Act

Providers of essential goods and services, including food, healthcare, education, rent, power, and baby products, will no longer be required to impose a Value Added Tax (VAT), thereby assisting families in better managing their fundamental needs. In other words, no more VAT on essential goods and services, including food, healthcare, education, rent, power, and baby products
VAT remains at 7.5%

COMPANY INCOME TAX under the new Nigeria Tax Act

Small enterprises with an annual turnover of less than N50 million will be exempt from company income tax. Additionally, they will be permitted to submit simpler tax returns without the necessity of audited financial statements.
Larger corporations will pay corporate income tax at 30%.
Moreover, Larger corporations will now have the opportunity to claim tax credits for VAT incurred on expenses and assets, allowing them to recover the 7.5% that would have been paid as VAT.
Tax incentives are also available for charitable organizations, cooperatives, educational institutions, and religious entities, provided their income does not derive from commercial activities.

TAX ON CRYPTO ASSETS under the New Tax Act

Cryptocurrency assets, non-fungible tokens (NFTs), and various other digital forms of value are currently categorized as taxable property.
This classification is applicable to both residents and non-residents who realize profits from the sale or exchange of digital assets in Nigeria.