As the Nigerian government prepares to implement new tax laws on January 1, 2026, there are mixed feelings of anticipation and anxiety among businesses, economic experts, and citizens regarding the impact.
The six-month deadline set from June 2025, when the laws were signed by President Tinubu, was intended to allow for robust stakeholder engagement and system adjustments. However, it has also prolonged a period of intense debate over the reforms’ potential impact on Africa’s largest economy.
The reforms, described by experts as the boldest in four decades, promise to streamline multiple taxation, simplify compliance, protect taxpayers’ rights, and modernize collection through technology.
During a two-day pre-sensitisation and message development workshop for Civil Society Organisations (CSOs) in Abuja, Olufemi Olarinde, Assistant Director, Fiscal & Tax Reform Implementation Division at the Federal Inland Revenue Service (FIRS), described the reform as a transformative journey in Nigeria’s tax system.
Olarinde, who is also the senior adviser to the FIRS executive chairman on Tax Policy, gave an overview of the tax laws and what the CSOs need to know and do to get citizens ready for the implementation of the Acts.
“From January 1, Nigeria begins a transformative journey in taxation. This reform is not about new taxes, but about fairness, simplicity, transparency, and accountability. It is a once-in-a-generation opportunity to rebuild trust between citizens and the tax system,” Olarinde told participants.
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Experts believe that Nigeria, Africa’s largest economy, generate far less revenue from taxes than its peers. According to World Bank data, the country’s tax-to-GDP ratio hovers around 10 per cent, compared to the African average of 16 per cent and the OECD average of 34 per cent.
Despite the low ratio, Nigerian businesses and households often complain of being overburdened by multiple taxation, levies imposed by federal, state, and local governments, many of them outside the legal framework. Small businesses, in particular, face harassment from tax agents, resulting in a climate of mistrust and evasion.
The new tax reform seeks to address these contradictions by reducing the number of taxes, codifying who can collect what, and introducing an Ombudsman to safeguard taxpayer rights.
The Four Acts Explained
1. Nigeria Tax Act
This law provides the foundation by defining legitimate taxes at federal, state, and local levels. It aims to end arbitrary levies imposed by subnational governments. For example:
- States will no longer impose duplicate consumption or environmental taxes already covered by federal law.
- Local governments will have clarity on levies such as tenement rates and motor park dues.
2. Nigeria Tax Administration Act
This establishes a uniform process for registration, filing, assessment, and dispute resolution. It standardizes timelines for filing and ensures that taxpayers have a right to be notified before enforcement actions.
Impact: A small business owner in Lagos who previously dealt with multiple, conflicting filing dates across agencies will now follow one clear calendar.
3. Nigeria Revenue Service (Establishment) Act
This repeals the FIRS Act and establishes the Nigeria Revenue Service (NRS), an independent, technology-driven authority. The NRS will:
- Expand e-filing systems.
- Reduce face-to-face interactions (a major source of bribery).
- Integrate state revenue authorities into a national database.
4. Joint Revenue Board (Establishment) Act
This re-establishes the Joint Revenue Board and creates the office of the Tax Ombudsman. The Ombudsman will function as an independent referee between taxpayers and authorities, addressing complaints of harassment, wrongful assessments, and overreach.
Impact: Traders often complain of being chased on the streets by revenue agents. With the Ombudsman, such practices can be reported and sanctioned.
At the Abuja workshop, Olarinde stressed that CSOs are critical partners in the reform journey and urged them to lead by example:
“Being a civil society organisation does not mean exemption from obligations. NGOs must register, keep proper accounts, deduct withholding tax on contracts, and file returns. Compliance begins with us,” he said.
Across Abuja Nigerians shared mixed feelings about the new tax laws.
“I just hope this is not another way to collect more money from us. If they truly remove all these multiple levies, then it’s good.” –said Usman Ibrahim, a taxi driver in Jabi.
“As a small business owner, I face harassment from different agents claiming to be from government. If this reform stops that, I support it 100%.” – Chinyere Okafor, shop owner, in Kubwa.
“We need to see results. If we pay taxes, let government fix roads, provide light, and support farmers. Otherwise, people will still resist,” – Samuel Adeyemi, a farmer.
“It’s encouraging that they want to use technology. But rural people who don’t have internet, how will they comply?” – Grace Etim, school teacher in kubwa.
“I welcome the Tax Ombudsman idea. At least now we can report unfair treatment without hiring lawyers.” – Ngozi Umeh, civil servant.
“I don’t believe anything will change. What has the government been doing with the taxes they already collect? Until citizens see real benefits, people like me won’t trust the system.” – A commuter in Abuja.
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Nigeria’s move aligns with global best practices. Kenya, Rwanda, and South Africa have all reformed tax administration in the past two decades, integrating digital systems and simplifying compliance.
Rwanda’s tax-to-GDP ratio rose from 9 per cent in 2000 to 16 per cent in 2020 after similar reforms.
The International Monetary Fund (IMF) has long urged Nigeria to increase non-oil revenue through effective taxation, warning that over-reliance on oil leaves the economy vulnerable to shocks.
What Will Change for You?
From January 1, 2026, Nigerians can expect:
- Fewer taxes: Over 60 existing taxes and levies reduced to a streamlined set.
- Digital filing: More payments can be made online, reducing queues and bribes.
- Tax Ombudsman: Independent office to protect taxpayer rights.
- Transparency: Receipts and credit notes for every payment.
- Clarity: Citizens will know exactly what taxes they owe and to which level of government.
Timeline of Nigeria’s Tax Evolution
- 1993 – Establishment of FIRS as an autonomous body.
- 2007 – FIRS Act strengthens collection powers.
- 2012 – Joint Tax Board begins reforms to harmonize PIT.
- 2025 – Passage of four new Acts, repeal of FIRS Act.
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2026 – Official rollout of Nigeria’s most comprehensive tax reform.
“This reform is not about new taxes but about fairness, simplicity, and transparency.” — Olufemi Olarinde
“We pay at every junction. If this harmonizes the system, it will reduce our suffering.” — Trader, Abuja
Nigeria’s Tax Future in Numbers
- 62: Current number of taxes/levies.
- 15–20: Expected streamlined taxes post-reform.
- 10%: Nigeria’s current tax-to-GDP ratio.
- 16%: African average.
- 2026: Effective date for the new laws.
READ ALSO: No Separate Tax ID Needed for Bank Accounts, FIRS Clarifies
As January 1, 2026 approaches, anticipation is high but so is skepticism. The reform package has the potential to boost revenue, reduce corruption, and rebuild public trust. But according to reports, analysts warn that political interference, lack of coordination among states, and entrenched resistance from informal collectors could derail the process.
For Olarinde and his team, however, the message is clear, Nigeria cannot afford to miss this opportunity. “The countdown has begun. We are not introducing new burdens but building a fairer, modern system that works for everyone,” he said.
Whether this marks the true rebirth of Nigeria’s tax culture will depend on how faithfully January 1, 2026, is executed.
For now, Nigerians wait with cautious optimism for the dawn of a new fiscal era.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
