The Nigerian government has unveiled sweeping tax reforms to increase revenue and ease the tax burden on low-income earners. According to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, the reforms seek to ensure that those who should pay taxes fulfill their obligations. Currently, there is a tax gap of 75%, that is, those who should be paying taxes that are not.
“We want to create a situation where everyone pays their fair share of taxes,” Oyedele said. The reforms introduce progressive taxation, where wealthy individuals earning above ₦1.5 million monthly will see their personal income tax rise by up to 25%. In contrast, those earning below this threshold will enjoy reduced tax rates.
The reforms will also benefit the corporate sector, with the corporate income tax rate dropping from 30% to 25%. “This is huge for businesses,” Oyedele noted. Additionally, essential goods and services such as food, health, education, accommodation, and transportation will have reduced or eliminated Value-Added Tax (VAT).
The reforms aim to create a more equitable tax system, exempting 97% of the informal sector from taxes. “People will pay tax once we decide that they have to pay,” Oyedele emphasized. “We realize that almost 90% of people paying taxes should not have been paying in the first place.”
To address the significant tax gap, the government will implement a national portal for seamless and transparent tax payments. Oyedele explained, “We want to remove unnecessary waivers and incentives that harm the economy.” The government will also utilize primary data identification channels to accurately identify taxpayers.
The Central Bank of Nigeria is working to ensure price stability through inflation targeting and robust risk management systems. “We are accelerating our inflation targeting to ensure price stability,” said Dr. Adetona Adedeji, Acting Director, Banking Supervision at the CBN.
These reforms aim to boost revenue, reduce inequality, and promote economic growth in Nigeria.
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