A fellow of the Chartered Institute of Taxation of Nigeria, Olugbenga Obatola, says the new Nigerian Tax Reform Act will ease the tax burden on low-income earners to tax affluence.

Mr Obatola stated this in an interview in Ibadan on Monday, while speaking on the new tax laws expected to take full effect from January 2026.

He explained that the new tax policy would promote economic equity and national revenue growth, describing the reform as one of the best policy developments Nigeria had witnessed in recent years.

Mr Obatola also stated that the new laws were designed to simplify the tax system, promote fairness, and expand the country’s revenue base.

According to him, the new tax regime is very progressive. It shifts focus from taxing poverty to taxing affluence. Those earning less than ₦90,000 per month will no longer pay any tax.

Mr Obatola added, ”The reform harmonises many of Nigeria’s multiple tax laws and replaces 11 of the country’s 40 existing taxes while amending 13 others.

”The Nigerian Tax Act 2025 now brings together several tax laws like Company Income Tax, Stamp Duty, Capital Gains Tax, and Value Added Tax under one umbrella for easier reference and administration.”

Mr Obatola said the tax reform package comprises four key laws: the Nigerian Tax Act 2025, the Nigerian Tax Administration Act 2025, the Nigerian Revenue Service Establishment Act 2025, and the Joint Revenue Board Establishment Act 2025.

He noted that the operations of the Nigerian Revenue Service and Joint Revenue Board had commenced since June, serving as precursors to the full implementation of the other laws in 2026.

Mr Obatola, who is also a Fellow of the Institute of Chartered Accountants of Nigeria, said the act would correct Nigeria’s long-standing “taxing proficiency” practice.

”This is where low-income earners were made to pay taxes  in spite of earning little, by ensuring that the system becomes fairer.

“If you are earning around ₦100,000 a month, by the time statutory deductions are made, your taxable income will fall within ₦800,000 per annum, which attracts zero per cent tax,”he explained.

He listed six statutory deductions under Section 30 of the Nigerian Tax Act, including the National Housing Fund, National Health Insurance Scheme, pension contribution, mortgage interest, rent relief, and other allowable deductions.

“The rent relief replaces the Consolidated Relief Allowance and is now the higher of 20 per cent of your rent allowance or a maximum of ₦500,000,” he said.

The tax expert further explained that taxpayers would be required to present verifiable documentation, such as rent receipts, before claiming reliefs, adding that this would improve accountability and bring landlords into the tax net.

“A lot of landlords collect rent without paying tax. Once tenants present rent receipts for relief, landlords’ details will be traceable. This will help expand the tax net,” he added.

He also stated that multinational companies operating in Nigeria would now be taxed on income generated within the country, with an effective tax rate of 15 percent.

“Where the tax paid is below 15 per cent, a global top-up rate will apply to ensure fairness between Nigerian and foreign companies,”he said.

He further stated that the reform would also improve Nigeria’s tax-to-GDP ratio, which had increased from approximately 10 per cent in 2023 to 13.5 per cent in 2024 and was projected to reach 15 per cent by the end of 2025.

Mr Obatola also said that the 15 per cent import levy on foreign goods was a deliberate measure to protect local industries and promote domestic production.

“By discouraging excessive imports and promoting local manufacturing, we are ensuring that Nigeria’s resources serve Nigerians first,” he said.

He appealed to Nigerians to embrace the reform with optimism, stressing that the long-term benefits would strengthen the economy and improve living standards.

“As an accountant and economist, I believe Nigeria will be better for it in the long run. The poor will be able to breathe, and the system will become more equitable,” Mr Obatola said. 

(NAN)