By: Mr. Kenneth Otowo & Mr John Samson Okpole

Introduction

On June 26, 2025, President Bola Ahmed Tinubu signed into law, four landmark Tax Reform Bills, ushering in a new era for Nigeria’s tax framework. The Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA) collectively aim to enhance tax administration, compliance, and revenue generation. This article provides a peripheral analysis of the key provisions and practical implications of these reforms for businesses and individuals.

Overview of Each Act

1. The Nigeria Tax Act (NTA)

The NTA introduces significant changes to Nigeria’s tax regime, inclusive of:

• Revised Tax Rates: The Act introduces a tiered tax system for corporates is with as low as 0% taxes for small companies (turnover ≤₦25 million), 17.5% for medium companies (turnover ₦25 million–₦100 million), and 30% for large companies. Personal income tax bands have also been updated, with a top marginal rate of 26% for individuals earning over ₦25 million per annum.
• VAT Expansion: VAT is increased to 10% and is now chargeable on digital services supplied by non-resident vendors and cryptocurrencies. This expansion aims to capture the growing digital economy and ensure that all businesses, including those operating digitally, contribute to the tax base.
• Tax Incentives: The NTA provides tax holidays (up to 5 years) for investments in renewable energy, agriculture value chains, and innovation hubs. Accelerated capital allowances are also available for qualifying industries, encouraging investment in key sectors.

   2. The Nigeria Tax Administration Act (NTAA)

The NTAA focuses on modernizing tax administration and enhancing compliance, with key provisions including:

•  Unified Electronic Tax Platform: Mandatory e-filing and e-payments are required of taxpayers with annual income or turnover exceeding ₦10 million. This platform enables taxpayers to track liabilities, assessments, and payments online, improving transparency and efficiency.
• Recordkeeping: Companies must retain tax records for 7 years and ensure readiness for electronic audits. This requirement aims to facilitate tax compliance and reduce the risk of disputes.
•  Stricter Penalties: Late filing attracts penalties of up to ₦5 million for companies, while false declarations attract civil penalties and potential criminal liability. These penalties aim to deter non-compliance and ensure that taxpayers adhere to their obligations, compared with the previous tax regime which states “failure to file Company Income Tax returns incurs a ₦25,000 penalty for the first month and ₦5,000 for each additional month, while late payment attracts a 10% penalty plus commercial interest. The new provisions now obviously prescribe stiffer penalties for non-compliance.

  3. The Nigeria Revenue Service Act (NRSA)

The NRSA replaces  the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS), with enhanced operational independence and performance-based funding. Key provisions include:

• Autonomy: The NRS enjoys enhanced operational independence, enabling it to efficiently manage tax administration and enforcement. While FIRS already had substantial autonomy under the 2007 Act, the 2025 reforms have consolidated and expanded it, transforming it into the more robust and independent Nigeria Revenue Service (NRS).
• Revenue Enforcement: A specialised Tax Enforcement Unit is established to fast-track collection of overdue taxes. The NRS is also empowered to block bank accounts and freeze assets administratively, providing a more effective mechanism for tax recovery.

    4. The Joint Revenue Board Act (JRBA)

The JRBA aims to harmonize tax administration across federal, state, and local governments, with key provisions including:

• Harmonisation: The Joint Revenue Board (JRB) is established to integrate federal, state, and local tax databases. A single Taxpayer Identification Number (TIN) is recognised across all levels of government, reducing duplication and enhancing efficiency.
• Information Sharing: Revenue agencies can share taxpayer data to prevent duplication and evasion, improving tax compliance and reducing the risk of tax disputes.

 Practical Implications for Businesses

The 2025 Tax Reforms have significant implications for businesses, including:

• Compliance: Businesses must comply with mandatory e-filing and e-payment requirements, ensuring timely and accurate submission of tax returns.
• Contract Reviews: Commercial contracts should be reviewed to factor in revised tax rates and compliance clauses, ensuring that tax obligations are clearly defined and allocated.
• Tax Planning: Businesses should consider tax planning strategies to benefit from available incentives and holidays, optimizing their tax position and reducing liabilities.

 Practical Implications for Individuals

The reforms also have implications for individuals, including:

•  Higher Tax Rates: High-income earners will be subject to higher tax rates, requiring careful tax planning to minimize liabilities.
• Taxation of Digital Assets: Gains from digital assets and cryptocurrencies are now taxable, requiring individuals to report and pay tax on these gains.
• TIN Requirement: Individuals earning over ₦10 million must maintain a valid TIN and comply with e-filing requirements, ensuring that they meet their tax obligations.

 Transition Provisions

A 3-month transition window (ending 30 September 2025) is provided for taxpayers to register for the unified tax portal, obtain or validate TIN, update records, and rectify outstanding filings without penalties. This transition period aims to facilitate a smooth transition to the new tax

 Conclusion

The 2025 Tax Reforms represent a significant shift in Nigeria’s tax environment, with a focus on transparency, digitisation, and enforcement. Early preparation and compliance will be crucial to avoid penalties and ensure seamless operations.