The Presidential Fiscal Policy and Tax Reforms Committee has again engaged journalists, influencers, and public analysts to clarify some misconceptions surrounding Nigeria’s newly enacted tax reform laws.
At the interactive session on Friday, October 3, in Lagos, the chairman of the committee, Taiwo Oyedele, highlighted key troubling spots, including personal income tax, value-added tax, tax identification, informal sector, and tax harmonisation.
He said it is usual for tax reforms to be misunderstood anywhere in the world.
He, however, said that deliberate misreporting and uninformed analyses are harmful to the collective interest of the people, given that the new reforms are designed to benefit ordinary Nigerians, secure long-term economic stability and inclusive growth for the country.
“The objectives of the reforms have been clear from the very beginning – reduce the tax burden on the masses, harmonise and simplify tax rules to address the multiplicity of taxes, promote a modern, business-friendly and globally competitive tax system. Our approach is people-centric, growth-focused, and efficiency-driven,” Oyedele said.
National minimum wage earners exempted
Explaining the key highlights of the new tax reform laws, Oyedele said on personal income tax, low-income earners, including those earning the national minimum wage, are exempted from tax.
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He said the average income earners will pay less tax while high-income earners, about the top three per cent of the population, will contribute progressively more, up to 25 per cent of their income.
“This is a much lower rate than the top rates in countries such as Ghana and Kenya at 35% and South Africa at 45%,” Oyedele cited.
Food, education, health services taxed at 0%
Businesses will enjoy broader input credits on their assets and overhead to lower costs, he noted.
He explained that basic items such as food, education and health services are taxed at zero per cent while rent and transportation are exempt.
He said these measures are expected to result in lower prices for consumers.
“In addition, small businesses are exempted from charging VAT ensuring that they are not overburdened with excessive tax obligations,” he said.
Tax ID and how it will be used
Explaining the controversies surrounding the Tax ID, Oyedele said the provision is only mandatory for opening and operating a bank account intended for income-generating or business purposes.
He noted that the Tax ID is not a new ID card but a system that builds on and harmonises the existing tax identification numbers (TIN) for ease of economic activities.
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“The requirement to provide a TIN for operating a business account was introduced via the 2020 Finance Act and has been implemented since 13 January 2020.
“While banks are required to report quarterly transactions above a certain threshold under the new tax laws, it is not true that inflows into bank accounts will be automatically taxed.
Small businesses exempted from CIT
According to the tax committee chairman, the new tax laws offer major tax relief to small businesses.
He said the new tax structure is designed to encourage formalisation by exempting small companies with an annual turnover of ₦100 million or less from corporate income tax (CIT).
In addition, he said small businesses are exempt from charging VAT or accounting for withholding tax on their transactions.
“The goal is to reduce the burden on nano, micro and small businesses who constitute the largest share of employment and GDP,” Oyedele explained.
Tax burden on citizens to be reduced
Oyedele hinted that there is an ongoing process to reduce over 60 different taxes and levies to fewer than 10, easing compliance and curbing the proliferation of multiple charges.
He explained that contrary to the misconception about imposing a higher tax burden or introducing new taxes, the current administration is reducing both the number of taxes and the burden on citizens and businesses.
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“Some taxes which were introduced by the previous administrations have in fact been reversed or suspended, including the 5% levy on airtime and data, cybersecurity levy on bank transfers, carbon tax on single-use plastics, excise tax on vehicles and so on,” Oyedele said.
No imposition of tax on individuals not previously taxable
Oyedele stressed that the new tax laws did not introduce taxes on individuals who were not previously taxable.
He said online content creators, influencers, income from virtual assets, and other income-generating activities have always been subject to tax under the old Personal Income Tax Act.
He explained that the new tax laws only provide clarity, and ensure fairness by allowing deductions for losses where applicable.
“Income earned by way of a gift rather than as a payment for a transaction is not taxable.
“The ongoing tax reform is raising public awareness which sometimes leads to the wrong impression that a requirement is new,” Oyedele said.
He stressed that the reforms are aimed at fairness, efficiency, and simplicity – ensuring that the tax system supports investment, job creation, and sustainable growth.
He said further that the reforms are not about raising taxes arbitrarily, but about making the system simpler, fairer, pro-people and pro-growth.
“The measures designed to curb tax evasion are necessary to provide a level playing field for honest and patriotic taxpayers,” Oyedele said, calling on Nigerians to seek credible information and engage constructively.
“These reforms are designed to benefit all Nigerians. Let us work together to ensure effective implementation and position ourselves for the better days ahead of us,” Oyedele said.
The committee assured stakeholders of working with relevant implementing agencies for a robust and transparent implementation process, with continuous engagement to seek feedback, address concerns and ensure smooth transition.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
