What is the summary and what are the implications of the new Nigerian tax laws 2025 under president Tinubu?

Jared wrote: ↑What is the summary and what are the implications of the new Nigerian tax laws 2025 under presudent Tinubu?

Based on my research, here's a comprehensive summary of Nigeria's new tax laws signed by President Tinubu in 2025:

Summary of the Four New Tax Laws

President Tinubu signed four major tax bills into law in late June 2025: the Nigeria Tax Bill (Ease of Doing Business), the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. The new tax regime will become effective January 1, 2026.

KEY PROVISIONS AND CHANGES

Tax Exemptions:
"Over one-third of workers in both public and private sectors will now be completely exempt from Personal Income Tax. More than 90% of micro, small, and nano enterprises are also exempt from Corporate Income Tax, VAT, and PAYE obligations".

VAT Reforms:
- VAT remains at 7.5% for now, after lawmakers rejected the original proposal to increase it, though there are plans for gradual increases to 12.5% by 2026 and potentially 15% by 2030
- Zero-rated VAT on essential items including basic food items, medical products, educational materials, and electricity services
- Businesses will receive tax credits for VAT paid on assets and expenses, potentially reducing production costs by up to 7.5%

Revenue Sharing Formula:
Under the new VAT distribution formula, each state will keep 30% of the VAT it generates, 50% will be shared equally among all states, and 20% will be allocated based on population.

Remote Workers:
Foreign earnings by remote workers are now taxable under the new reforms.

MAJOR IMPLICATIONS

Economic Development:
The reforms aim to consolidate Nigeria's fragmented tax system into a harmonized framework, potentially improving the ease of doing business and making the tax system more efficient.

State Revenue Generation:
The new VAT sharing formula represents a significant shift toward rewarding states for their economic activity. Lagos State, which contributed 2.27 trillion naira, will benefit significantly from the new derivation-based formula.

Business Impact:
Small businesses and low-income earners receive substantial relief through extensive exemptions, while the VAT credit system should reduce production costs for larger businesses.

Administrative Restructuring:
The establishment of new revenue agencies and administrative frameworks suggests a major overhaul of how taxes are collected and managed across federal, state, and local levels.

These reforms represent one of the most comprehensive tax overhauls in Nigeria's recent history, designed to increase revenue generation while reducing the burden on small businesses and low-income workers.