Individuals earning up to N100,000 per month will not pay personal income tax next year under Nigeria’s new tax reforms, according to Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee.

Oyedele said the reforms are designed to ease the tax burden on low-income earners while promoting fairness, compliance, and broader economic growth.

He explained that even with a minimum wage benchmark of N70,000, the tax payable by workers will drop significantly under the new tax law. According to him, the first N800,000 of taxable income is now subject to zero percent tax, which effectively means that individuals earning up to about N100,000 per month will not pay personal income tax next year. Oyedele stressed that many people often confuse gross income with taxable income, noting that taxable income is calculated after statutory deductions and other allowable contributions have been removed.

Speaking at a workshop in Lagos, Oyedele urged workers to take personal responsibility for understanding the new system by calculating their own tax using the official tax calculator. He advised employees to question their accountants or employers if their take-home pay does not drop as expected, adding that transparency and awareness are essential to making the reforms work as intended.

Oyedele said the tax reforms are aimed at promoting fiscal equity and reducing the burden on low-income earners, while ensuring that those with higher incomes contribute a fairer share. He explained that the reforms include changes to income tax rates, with low-income earners exempted and the top rate increased for high-income earners. He also emphasised the importance of formalising the informal sector, noting that bringing more economic activities into the tax net is critical to increasing government revenue and supporting sustainable economic growth.

He highlighted additional measures to support businesses, including a reduction in the corporate income tax rate and the introduction of value-added tax input credits, which are expected to lower operating costs and improve competitiveness. According to him, these changes are part of a broader effort to create a more business-friendly environment and stimulate investment.

Addressing concerns around tax evasion and compliance, Oyedele said the reforms introduce stronger measures to improve trust and accountability in the system. He pointed to the creation of the Office of the Tax Ombudsman as a key innovation, explaining that it will help resolve tax disputes, support self-assessment, and protect taxpayers from unfair treatment. He added that modernising the tax system and building institutional capacity are critical to making it more efficient, transparent, and user-friendly.

Oyedele also spoke on new economic development incentives targeted at priority sectors, including tax exemptions for qualifying investments. He said these incentives are designed to promote economic growth, create jobs, and level the playing field so that businesses can compete more effectively. He noted that while the potential impact on the economy is significant, proper implementation and oversight will be essential to achieving the desired outcomes.

On capital market reforms, Oyedele explained that capital gains tax has been harmonised with income tax to close loopholes and promote fairness. He said investors in the capital market will benefit from specific exemptions under defined conditions, including reduced corporate income tax and the exemption of withholding tax on dividends. He emphasised the need for accurate and responsible reporting of the reforms to avoid misinformation that could create negative sentiment and undermine confidence.

He acknowledged that implementing the new tax laws will not be without challenges, citing low levels of trust, misinformation, and capacity constraints as key risks. Oyedele said effective communication, education, and stakeholder engagement are crucial to managing change and ensuring a smooth transition. He added that building capacity across institutions will be necessary to implement the reforms successfully.

Oyedele also referenced the President’s fourth set of executive orders, which included the suspension of several taxes such as the excise tax on airtime and telecom data, the cybersecurity levy, and the carbon tax on single-use plastics. He said import duties on selected food items, pharmaceuticals, and imported vehicles were also suspended, alongside charges by the Financial Reporting Council and the expatriate employment levy. He clarified that the government is not promoting itself but is committed to sharing accurate data about the reforms, stressing that the changes represent more than tax reductions and amount to a reset of the economy and the social contract.

He advised stakeholders to study the new tax laws carefully, implement them diligently, and carry out their own due diligence, while reporting any incorrect information they encounter. Speaking on positioning for emerging opportunities, Oyedele noted that capital markets have recorded strong gains in the past two years, while virtual assets such as crypto and stablecoins now have an estimated market size of about 60 billion dollars. He encouraged stockbrokers to promote the stock market to young people as a more attractive option, citing its tax-free status and relatively higher returns.

Oyedele reiterated the importance of understanding and properly implementing the new tax laws, urging all stakeholders to position themselves to benefit from the economic opportunities created by the reforms and to support Nigeria’s overall growth and development. (BusinessDay)

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