Nigeria will usher in a new tax regime from January 1, 2026, marking one of the most significant overhauls of the country’s fiscal framework in recent years as the government seeks to boost revenue, simplify compliance, and widen the tax base.
The new tax law, approved as part of broader fiscal reforms, is designed to streamline Nigeria’s complex tax system, reduce overlaps between federal and subnational taxes, and improve efficiency in collection. Authorities say the reforms are aimed at strengthening public finances at a time of rising spending pressures and persistent revenue shortfalls.
Nigeria has long struggled with low tax-to-GDP ratios, estimated at among the lowest globally, despite being Africa’s largest economy. Officials argue that the new framework will help address structural weaknesses by improving administration, closing loopholes, and encouraging greater compliance, particularly from the informal sector and high-income earners who remain largely outside the tax net.
Under the reform agenda, the government has signalled a stronger emphasis on digital tax administration, risk-based audits, and clearer rules for businesses and individuals. The changes are also expected to clarify the roles of federal, state, and local tax authorities, a long-standing source of friction that has increased costs for companies operating across multiple jurisdictions.
Business groups have cautiously welcomed the move, saying predictability and simplification will be critical to improving Nigeria’s investment climate. However, they have also urged authorities to ensure that implementation does not translate into higher effective tax burdens or multiple levies under different names.
More Read
The government has said the one-year transition period before the law takes effect is intended to allow taxpayers, revenue agencies, and state governments to adjust systems, issue guidelines, and carry out stakeholder engagement. Public awareness campaigns and capacity-building for tax officials are expected to intensify in the months ahead.
As Nigeria prepares to roll out the new tax law, the success of the reform will hinge on consistent enforcement, coordination across tiers of government, and the ability to balance revenue mobilisation with economic growth. For investors and taxpayers alike, January 2026 will mark a pivotal moment in the country’s fiscal policy direction.
