Abuja, Nigeria – May 10, 2025 — Nigeria is on the cusp of a significant fiscal transformation following the National Assembly’s passage of four comprehensive tax reform bills. These legislative measures aim to enhance government revenue, streamline tax administration, and modernize the country’s fiscal policies.(Reuters, Financial Times)

Key Highlights of the Tax Reform Bills

• Establishment of the Nigeria Revenue Service (NRS): The Federal Inland Revenue Service (FIRS) will be replaced by the newly proposed Nigeria Revenue Service, tasked with federal tax collection and administration. (Premium Times Nigeria)
• Value-Added Tax (VAT) Adjustments: While initial proposals suggested increasing VAT from 7.5% to 12.5%, the Senate has retained the current rate. However, there is a structured plan to gradually increase VAT on non-essential items to 10% in 2025, 12.5% from 2026 to 2029, and 15% from 2030 onwards. (Reuters, Chambers Practice Guides)
• Corporate Income Tax (CIT) Revisions: The CIT rate is set to decrease from 30% to 27.5% in 2025, with a further reduction to 25% from 2026. Additionally, the definition of a “small company” has been expanded to include businesses with a gross turnover of up to ₦50 million and total fixed assets not exceeding ₦250 million, excluding professional service providers. (Business Day, Mondaq)
• Personal Income Tax (PIT) Overhaul: A new progressive tax system has been introduced, exempting the first ₦800,000 of income. Subsequent income brackets will be taxed at rates ranging from 15% to 25%, ensuring a fairer tax burden distribution. (Mondaq)
• VAT Revenue Distribution: The allocation formula has been revised to distribute 10% of VAT revenue to the federal government, 55% to states and the Federal Capital Territory (FCT), and 35% to local governments. (Premium Times Nigeria)

Next Steps

With both chambers of the National Assembly having passed the bills, a harmonization committee will reconcile any differences between the versions. The finalized bills will then be presented to President Bola Tinubu for assent. Once signed into law, these reforms will mark a new era in Nigeria’s fiscal policy, aiming to reduce reliance on borrowing and foster sustainable economic growth.(The Nation Newspaper, Channels Television)

Stakeholders across various sectors are advised to stay informed on these developments and prepare for the impending changes in the tax landscape.

For more detailed information on the tax reform bills and their implications, please refer to the official publications from the National Assembly and the Federal Ministry of Finance.