By Prof. CHIWUIKE UBA

For decades, Nigeria?s tax system has symbolised everything wrong with the country?s broader fiscal culture?narrow tax bases, overburdened workers, under-taxed elites, a thriving informal sector, and rampant corruption. With a tax-to-GDP ratio that has hovered between 6% and 8%, Nigeria remains one of the poorest tax performers in Africa. This has forced the country into the clutches of debt, aid dependence, and volatile oil markets.

In this context, the signing into law of four pivotal instruments in 2025?the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act?is a watershed moment. These laws are not merely administrative documents; they aim to redefine the very philosophy of taxation in Nigeria. But can they succeed where past reforms faltered?

One of the most commendable features of the new tax architecture is its deliberate tilt toward progressivity. For the first time in Nigeria?s history, low-income earners?those earning N800,000 or less annually?are legally exempt from personal income tax, as stipulated in Section 58 of the Nigeria Tax Act, 2025. This is a bold and compassionate gesture in a country where millions survive on less than a dollar a day. In parallel, small and medium enterprises (SMEs) with turnover not exceeding N100 million benefit from simplified compliance, and those earning below N25 million face a 0% Company Income Tax (Section 56). These measures, if diligently implemented, could lower the fiscal burden on the poor and catalyse business formalisation.

Digitisation is no longer aspirational. It is now statutory. The mandatory use of Tax Identification Numbers (TINs) by individuals, companies, and all government entities (Tax Admin Act, Sections 4?8) is reinforced by integration with national identity systems such as NIN and BVN. Taxpayer data will be linked, returns can be filed electronically, and VAT tracked in real time via fiscalisation systems (Section 23). Artificial intelligence, e-invoicing, and API-based validation are no longer futuristic buzzwords?they are legal obligations. If implemented with fidelity, these provisions could usher in an era of traceability, efficiency, and fraud minimisation.

Equally important is the move toward harmonisation. The Joint Revenue Board (Sections 3 and 5, JRBE Act) is empowered to align the operational frameworks of federal, state, and local tax bodies. States may now legally authorise the Nigeria Revenue Service to collect certain taxes on their behalf (NIRS Act, Section 5), potentially ending the crisis of multiple taxation that has long strangled enterprises. The establishment of the Office of the Tax Ombud (Tax Admin Act, Section 141) finally provides taxpayers with a platform for grievance redress and rights protection?a crucial element in rebuilding trust.

Crucially, the laws shine new light on wealth taxation. Capital Gains Tax (CGT), long neglected, now extends to disposals of land, shares, digital assets, and intellectual property (Nigeria Tax Act, Sections 33?49). Exemptions exist for small gains (under N10 million), charitable donations, and reinvestments. Similarly, Withholding Tax (WHT) is clarified and strengthened. Payments for consultancy, rent, royalties, dividends, and digital services are now subject to source taxation (Tax Admin Act, Section 51), with stiff penalties for non-compliance, including a 10% surcharge and joint liability provisions.

The reforms also address long-standing concerns about tax avoidance by multinational corporations. Sections 190?195 of the Nigeria Tax Act strengthen transfer pricing rules, mandate arm?s-length pricing for related-party transactions, and authorise audits of offshore arrangements. These tools are critical in curbing base erosion and profit shifting.

Yet, even the most promising reforms contain cracks. While thresholds for exemptions are clearly stated, there is no comprehensive rate schedule or simplified taxpayer handbook. For small businesses and informal traders, navigating this new terrain could feel like walking through a legal labyrinth. More worryingly, the laws fall short of being gender-responsive. Nigeria?s tax system continues to overlook the unique challenges faced by women-led businesses, particularly in the informal sector. There are no dedicated tax credits, waivers, or capacity-building provisions to support them.

For pro-poor taxation to be meaningful, exemptions alone are not enough. Nigeria must integrate tax reforms with its social protection architecture?linking tax IDs with the National Social Register, conditional cash transfers, and health insurance schemes. Tax justice must go hand in hand with social equity.

Also concerning is the treatment of tax refunds. Section 55 of the Tax Administration Act provides for a refund mechanism, but fails to specify mandatory timelines or automated triggers. In a system notorious for bureaucratic inertia, this ambiguity could discourage voluntary compliance and hurt legitimate businesses?particularly exporters and large buyers with input tax credits.

Another glaring omission is the lack of a statutory tax expenditure reporting framework. While the law mandates individual companies to file tax incentive returns (Section 27), Nigeria still lacks a comprehensive, government-wide tax expenditure reporting framework?one that discloses, aggregates, and evaluates the full cost of tax incentives across sectors annually. Nigeria still lacks a national annual tax expenditure statement?common in countries like South Africa, Kenya, and Canada. There is also no mandatory public disclosure of the total revenue forgone through waivers and exemptions, nor any process for conducting cost-benefit analyses of tax incentives. This leaves policymakers and citizens without a clear picture of the trade-offs inherent in Nigeria?s fiscal regime. Many countries now publish annual reports disclosing the fiscal cost of waivers and exemptions. This is crucial for transparency and accountability, especially as Nigeria foregoes significant revenue through corporate incentive.

Implementation remains the elephant in the room. Despite the legal ambitions, many LGAs lack even the most basic infrastructure: no broadband, no trained personnel, no digital systems. The gap between high-performing states like Lagos and digitally barren regions could widen inequities. Furthermore, federal-state tensions over revenue collection?especially in politically charged environments?may undermine the harmonisation agenda of the Joint Revenue Board.

There is also a risk that tax enforcement may become politicised if revenue authorities are not granted institutional independence. The appointment process for NRS and State IRS leaders lacks insulation from political interference. Strong institutions?not just strong laws?are needed for reform to endure.

Nevertheless, the reforms hold transformative potential. The legal grounding for taxing virtual assets, digital transactions, and non-resident service providers brings Nigeria in line with global shifts. Environmental levies and the 5% fossil fuel surcharge (Tax Act, Section 159) lay the foundation for green taxation and climate finance. The requirement for firms to file tax incentive returns (Tax Admin Act, Section 27) could expose abuse and improve transparency.

Yet, the effectiveness of incentives remains uncertain. While companies must now file tax incentive returns, there is no obligation for government to publicly disclose the cost-benefit outcomes of these waivers. Without impact evaluation, incentives may remain opaque tools for rent-seeking rather than catalysts for growth.

Globally, countries like Rwanda, South Africa, Kenya, and Ghana have made commendable strides in smart taxation. But effective taxation must go beyond collection?it must shape budgeting, planning, and delivery. Public financial management reforms must therefore link tax revenue directly to the national and subnational budget cycles. Citizens should be able to trace how their taxes fund public goods?schools, hospitals, roads.

Budget transparency portals, tax-tagged project monitoring, and community scorecards can help bridge the trust deficit between taxpayers and governments. Nigeria should institutionalise participatory budgeting mechanisms where communities have visibility and say over how local tax revenues are allocated. Nigeria must not only catch up, but leap ahead. With the right leadership, we can pioneer tax innovation by integrating AI, blockchain, and geospatial analytics into compliance systems.

The reforms also raise important questions about fiscal federalism. Beyond structural harmonisation, the deeper issue lies in Nigeria?s unresolved fiscal arrangements. The tension between centralised tax administration and state-level autonomy?especially over VAT and mineral revenue?requires constitutional clarity, not just administrative alignment. Without resolving these core tensions, the Joint Revenue Board may struggle to build consensus across Nigeria?s federating units.

Additionally, the 2025 laws position Nigeria to better align with the OECD?s Base Erosion and Profit Shifting (BEPS) action plans. As digital taxation and global minimum tax rules evolve, Nigeria must actively participate in multilateral for a to ensure that African interests are represented in the design of fairer international tax rules.

To unlock Nigeria?s vast informal and youth-led economic sector, reforms must be paired with tailored instruments: simplified presumptive tax regimes, mobile-based registration, and incentives for digital bookkeeping. A youth tax transition scheme?offering tax holidays in exchange for digital onboarding?could be a game-changer.

While the Tax Appeal Tribunal and Ombudsman offer structured redress, a clogged and underfunded judiciary still hampers timely resolution of tax disputes. Tax reforms must therefore be accompanied by judicial capacity-building?especially at state levels?to deliver consistent, fast, and fair decisions.

The consolidation of tax powers under the NRS, while efficient on paper, risks recentralising fiscal authority in a way that disempowers states. A careful balance must be struck between national uniformity and local innovation?especially in states with unique economic profiles or reform momentum.

Nigeria?s thriving fintech ecosystem offers untapped potential as a compliance partner. Government can co-create APIs and low-code solutions with startups to onboard informal traders, track VAT in retail, and automate tax reporting for gig workers.

Nigeria?s introduction of a fossil fuel surcharge is commendable. Equally vital is leveraging tax reforms as a tool for anti-corruption. The integration of taxpayer identification with financial data, combined with AI-enabled audit tools, offers a new frontier for detecting procurement fraud, illicit enrichment, and off-budget spending. Tax transparency should also extend to public officeholders?requiring annual asset declarations to align with tax records. By linking tax with governance integrity, Nigeria can strike at the heart of corruption. But true green taxation will require a broader policy framework?carbon pricing, environmental levies on extractive industries, and incentives for climate-smart agriculture. A national green fund, capitalised by eco-taxes, could accelerate climate resilience and low-carbon transition.

Beyond legal reform, citizens need practical tools. Among the groups most affected by taxation are Nigeria?s senior citizens, persons with disabilities (PWDs), and other vulnerable populations. Yet, the new laws do not contain specific tax reliefs, exemptions, or targeted incentives for these groups. Tax justice must be sensitive to age, ability, and marginalisation. For instance, offering PIT exemptions to retirees with limited pensions, or VAT exemptions for assistive devices and disability-related services, can align the tax code with social equity. Government should also consider tax support programs?such as mobile filing assistance or community tax advisors?for PWDs and the elderly. A national tax calculator app, simplified rate tables, and community-based tax education will demystify compliance. Without clarity, even well-meaning reforms risk alienating the very citizens they intend to support.

The 2025 tax reform laws represent not just new rules, but a new opportunity. An opportunity to make taxation an instrument of justice and development. An opportunity to wean Nigeria off oil dependence. An opportunity to restore the dignity of the taxpayer. Whether these laws deliver on their promise will depend on the courage of leaders, the integrity of institutions, and the commitment of citizens. Nigeria has written the laws. Now it must write the legacy.

?Prof. Chiwuike Uba, Ph.D., ACTI, FCNA is a development economist, fiscal governance expert, tax expert, and author of multiple policy papers on tax reform and public finance. He serves as the Chairman of the Board, ACUF Initiative for Policy and Governance.

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