As Nigerians look forward to the implementation of new tax laws, the Federal Inland Revenue Service (FIRS) said one key change in the Nigeria Tax Act (NTA) 2025 is the pegging of the development levy at a single rate of four per cent.
The Coordinating Director of the Medium Taxpayers Group at the FIRS, Dick Irri, emphasised this while speaking on the topic ‘Fiscal Coordination and Intergovernmental Revenue Sharing under the 2025 Tax Acts,’ at a 2-day National Stakeholders Discourse organised by the NRaveneue Monbilisation Allocation and Fiscal Commission on Monday in Abuja.
The development levy is a charge placed on the assessable profits of companies.
At four per cent, the new levy replaces several older, fragmented sectoral taxes from January 2026 when the new tax law takes effect.
Irri noted that before the 2025 Act, agencies, including the Tertiary Education Trust Fund (TETFund), the National Information Technology Development Agency (NITDA), the National Agency for Science and Engineering Infrastructure (NASENI), and the Police, relied on separate earmarked levies.
He stressed the consequences have been multiple payment points for companies, administrative overlap and confusion, weak compliance, and unpredictable funding for key institutions.
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“The NTA replaces all fragmented levies with a single Development Levy payable by all companies except small companies and non-residents.
“This reflects global best practices for efficiency and taxpayer experience,” Irri said.
He explained that ideal fiscal coordination and effective intergovernmental revenue sharing are fundamental pillars of any functional federal system.
According to him, the reality has been that, in Nigeria, these pillars have historically been weakened by fragmented tax legislation, overlapping mandates, and persistent disputes between the tiers of government.
“The nation has struggled with a patchwork tax framework marked by multiple amendments, parallel collection authorities, absence of harmonised taxpayer data, and high levels of non-compliance,” Irri said.
He maintained that the new tax laws represent the most significant overhaul of Nigeria’s tax governance framework in decades.
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Before the new tax laws, there were uncoordinated multiple, independently operating agencies, including the FIRS, SIRS, LGs, Customs, and an inconsistent taxpayers database.
He said specifically that one of the most transformational reforms is the strengthening of the Joint Revenue Board.
Under the old regime, the Joint Tax Board operated largely as a consultative body without enforcement power.
He said but the 2025 JRB Act transforms it into a genuine intergovernmental coordination institution, reducing conflict and promoting nationwide standards.
“The strengthening of JTB and TAT and the creation of the Tax Ombudsman are welcome developments in the tax ecosystem,” Irri said.
He, however, said that there will be challenges and implementation risks to be faced.
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He highlighted a few of the challenges, including enforcement, suggesting effective adoption of fiscalisation technology like merchant-buyer e-invoicing.
He said there should be collaboration to ensure all states collaborate within the JRB framework.
He raised concerns about leakages to prevent revenue loss during the transition, as well as legacy issues like managing tax arrears from abolished levies.
“With effective implementation, these reforms can significantly increase national revenue performance, strengthen intergovernmental relations, and foster a transparent, technology-driven tax environment,” Irri said.
He called for the deployment of relevant technology to support revenue administration and tax compliance.
He also urged the conduct of tax education and sensitisation for voluntary compliance across all sectors while promoting and sustaining intergovernmental fiscal coordination to oversee success.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
