On June 26, 2025, Nigeria took a bold step towards reshaping its fiscal landscape as President Bola Tinubu signed four transformative tax reform bills into law, officially gazetted by the Federal Government. These laws, designed to streamline taxation, boost economic growth, and ease the burden on small businesses, mark a significant milestone in the country’s journey towards fiscal sustainability. The reforms, detailed in a statement by Kamorudeen Yusuf, Personal Assistant on Special Duties to the President on Wednesday, introduce a new framework that promises to redefine how businesses operate in Nigeria’s vibrant economy.
The four legislations Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025, Nigeria Revenue Service (Establishment) Act 2025, and Joint Revenue Board (Establishment) Act 2025 represent a comprehensive overhaul of the nation’s tax system.
According to Yusuf, “These reforms aim to simplify Nigeria’s tax system, support small businesses, attract investment, and strengthen fiscal stability, aligning with President Tinubu’s Renewed Hope Agenda to diversify revenue away from oil.” This shift is critical for a country where oil has long dominated revenue streams, contributing over 70% of government income in recent years, despite volatile global prices.
For small and medium enterprises (SMEs), which form the backbone of Nigeria’s economy, the reforms bring significant relief. The gazette explicitly states, “Small businesses with turnover under ₦100m and assets below ₦250m are exempted from corporate tax.”
The exemption introduced for Small and Medium Enterprises (SMEs) in Nigeria is a pivotal development for the country’s economy. With an estimated 41 million SMEs operating in the country, these businesses are a significant backbone of Nigeria’s economy, employing over 80% of the workforce and contributing nearly 50% to the national GDP. According to the National Bureau of Statistics (NBS), the impact of these businesses cannot be overstated, as they are responsible for a major portion of Nigeria’s employment and economic output.
One of the key benefits of this exemption is the removal of the corporate tax burden on SMEs. This allows these businesses to reinvest their profits into crucial areas such as expansion, innovation, and hiring new talent. As a result, there is potential for a reduction in unemployment, which stood at 5.3% in Q1 2025, contributing to a more robust and sustainable labor market.
With this tax relief, SMEs will have the opportunity to grow their operations and create more jobs, which is a critical step towards boosting the economy and addressing the challenges of unemployment and underemployment. This exemption is therefore a lifeline that can fuel long-term economic growth, innovation, and development across Nigeria’s business landscape.
Larger corporations also stand to benefit from the reforms. The gazette notes, “Corporate tax rate for large firms may be cut from 30% to 25% at the President’s discretion.”
Recent developments in Nigeria’s fiscal policy indicate a move toward reducing corporate tax rates to make the country a more competitive investment destination in Africa. Currently, Nigeria’s corporate tax rate stands at 30% for large companies, but reforms are set to gradually reduce this rate to 25% by 2026 . This shift is aimed at enhancing Nigeria’s appeal as a business hub, especially in comparison with other African economies such as Kenya and Ghana, where corporate tax rates are 30% and 25%, respectively .
According to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, a lower tax rate for large firms can significantly drive investment and job creation, positioning Nigeria as a key player in Africa’s business landscape. Oyedele emphasized the importance of maintaining a competitive tax regime to foster growth, stating, “A lower tax rate for large firms can drive investment and job creation, positioning Nigeria as a hub for business in Africa.”
As part of Nigeria’s tax reforms, a top-up tax system is being introduced. This will target high-revenue companies, including multinational firms. The thresholds for this tax are set at ₦50 billion for local firms and €750 million for multinationals . The goal is to ensure that large corporations contribute their fair share to the tax pool, aligning with global trends in progressive taxation and meeting international standards.
This tax system will help close the gap in Nigeria’s tax-to-GDP ratio, which stood at 10.8% in 2024, significantly lower than the African average of 16.5% . The introduction of the top-up tax is seen as a critical step in increasing revenue to fund essential infrastructure and social programs.
Another forward-thinking provision is the 5% annual tax credit for projects in priority sectors, such as agriculture, manufacturing, and renewable energy.
For businesses dealing in foreign currency, a common practice in Nigeria’s import-heavy economy the reforms offer practical relief. The gazette states, “Companies transacting in foreign currency may now pay taxes in naira at official exchange rates.”
This provision addresses a long-standing pain point, as fluctuating exchange rates have often complicated tax compliance. With the naira’s value stabilising at around ₦1,600 to $1 in mid-2025, per Central Bank of Nigeria data, this measure ensures predictability and reduces the financial strain of sourcing foreign exchange for tax payments.
The implementation timeline is strategic. While the Nigeria Revenue Service Act and Joint Revenue Board Act took effect immediately on June 26, 2025, the Nigeria Tax Act and Nigeria Tax Administration Act will commence on January 1, 2026. This staggered approach gives businesses time to adapt to the new rules while establishing robust administrative structures.
The Nigeria Revenue Service, replacing the Federal Inland Revenue Service, aims to enhance efficiency, while the Joint Revenue Board will harmonise tax collection across federal and state levels, reducing overlaps that have long frustrated taxpayers.
These reforms are not without challenges. Critics argue that the discretionary power to reduce corporate tax rates could lead to uneven application, potentially favouring politically connected firms. Others note that the top-up tax might deter some multinationals, though Oyedele counters, “The €750 million threshold ensures only the largest players are affected, leaving room for smaller foreign firms to thrive.”
Public awareness will also be key, as many SMEs may not fully understand the exemptions available to them. The government plans to roll out sensitisation campaigns in 2026 to bridge this gap.
