Tinubu: New Tax Law Will Ease Burden on Low-Income Nigerians

President Bola Tinubu has assured citizens that the new tax regime set to take effect from January 2026 will not increase the burden on existing taxpayers but instead provide relief for low-income workers and small businesses.

Delivering his Independence Day address on Wednesday as Nigeria marked 65 years of nationhood, the President said the reforms were aimed at expanding the tax base, improving compliance, and making taxation fairer. He noted that the country’s tax-to-GDP ratio had already risen to 13.5 percent from below 10 percent when his administration assumed office in 2023.

“The tax law is not about increasing the burden on existing taxpayers but about expanding the base to build the Nigeria we deserve and providing tax relief to low-income earners,” Tinubu said.

He acknowledged that recent economic reforms have triggered “temporary pain” for citizens through inflation and higher living costs but insisted that avoiding bankruptcy was not an option.

“Fellow Nigerians, I have always candidly acknowledged that these reforms have come with temporary pains. But our macro-economic progress has proven that our sacrifices have not been in vain. We are laying a new foundation cast in concrete, not on quicksand,” he added.

Reliefs for Workers and Businesses

Under the new tax law, personal income tax has been removed entirely for workers earning less than ₦800,000 annually. This exemption, Tinubu said, was designed to shield the lowest income earners from additional pressure while encouraging wider compliance.

Small companies are also beneficiaries. Businesses with annual turnover of up to ₦100 million and fixed assets not exceeding ₦250 million are exempt from Companies Income Tax (CIT), Capital Gains Tax, and the new Development Levy. The new threshold is a significant increase from the previous ₦25 million limit.

In addition, Value Added Tax (VAT) will no longer apply to essential goods and services such as basic food items, educational books and tuition, and shared road transport services. This, the government explained, is intended to ease financial strain on everyday citizens.

The reforms also replace the old Pioneer Status Incentive regime with the Economic Development Tax Incentive, which offers longer-term benefits, up to 20 years, for businesses in critical sectors. Agricultural start-ups, in particular, will enjoy a five-year tax holiday to spur food production and investment in farming.

Exporters will also benefit, as profits from goods shipped abroad will be exempt from income tax, provided the proceeds are repatriated legally.

Administrative Overhaul

Beyond relief measures, the government is restructuring tax administration to curb duplication and inefficiency. The new laws consolidate multiple tax statutes—including the Companies Income Tax Act, Personal Income Tax Act, and VAT Act—into a single legal framework.

A new Nigeria Revenue Service (NRS) will replace fragmented agencies as the sole collector of federally chargeable taxes, while a unified Nigeria Tax Administration Act will set out consistent rules for compliance and enforcement.

The reforms also introduce an Office of the Tax Ombudsman, an independent body to resolve disputes between taxpayers and authorities.

Tinubu said these steps would strengthen transparency, reduce bureaucracy, and ensure fair treatment for all taxpayers.

On the broader economic outlook, the President urged Nigerians to support reforms by paying taxes, boosting productivity, and patronising locally made goods.

“Let us be a nation of producers, not just consumers. Let us farm our land, build factories, and patronise ‘Made-in-Nigeria’ goods. Nigeria first. Let us pay our taxes,” he said.

While promising continued investment in food security, education, power, and community safety, Tinubu described the new tax framework as a cornerstone of his administration’s economic agenda.

“Our success will not be measured by statistics alone, but by food on our tables, quality education for our children, electricity in our homes, and security in our communities,” he said.