For years, navigating taxes in Nigeria has felt like walking through a maze. Between the confusing laws, multiple agencies, and unclear payment systems, many people simply gave up or avoided taxes altogether. But now, change is here.
In 2025, the Nigerian government introduced a set of major tax reforms that aim to simplify the entire system. These changes affect individuals, small business owners, large companies, and even freelancers. The best part? If you plan well, these reforms can actually help you save money, grow your business, and avoid penalties.
This blog post will explain what these reforms are, when they take effect, how they affect different groups of people, and how you can benefit from them.
What Are the Recent Tax Reforms in Nigeria All About?
In June 2025, the Nigerian government passed four new tax laws:
- The Nigeria Tax Act (NTA)
- The Nigeria Tax Administration Act (NTAA)
- The Nigeria Revenue Service Act (NRSA)
- The Joint Revenue Board Act (JRBA)
These new laws has made navigating taxes easier. Instead of having multiple confusing rules, Nigeria now has one clear, modern tax system that everyone can understand and follow.
1. Relief for Small Business Owners
If you run a small business, this is probably the most important part for you.
The new law says that if your business earns one hundred million naira or less in a year, and if your total business assets are not more than two hundred and fifty million naira, then you will no longer need to pay the following taxes:
- Company Income Tax (CIT)
- Capital Gains Tax (CGT)
- Development levy (which is a new four percent charge introduced under the reforms)
This is a big win for small business owners. You can reinvest more money into your business, pay your staff, or expand into new areas without worrying about heavy tax bills.
But to enjoy these benefits, your business must keep proper records of its earnings and assets. If you are not sure how to do this, now is the right time to get help from an accountant or tax advisor.
2. A New Development Levy for Bigger Companies
For larger companies that make a profit above the small business threshold, the government has introduced a new development levy. This levy is charged at four percent of the company’s taxable profit.
It consolidates several old levies that companies used to pay to various agencies. The idea is to make things simpler, just one payment instead of many. The money collected from this levy will be used to fund infrastructure, education, healthcare, and other development projects across Nigeria.
If you run a medium or large company, you will need to adjust your tax planning to include this four percent levy.
3. Capital Gains Tax Changes
Capital gains tax is the tax you pay when you sell something valuable like land, shares, or a building and make a profit.
Under the new reforms:
- Companies will now pay thirty percent capital gains tax
- Individuals will pay tax based on their personal income tax rates
So if you are planning to sell land or shares through your company, be aware that a good portion of the profit will now go to taxes. It is now more important than ever to study your sales carefully and get advice before making big financial moves.
4. Minimum Tax Rule for Large Corporations
Some big companies in Nigeria have been reporting zero profit for years, even though they continue to grow and expand. To stop this, the new law introduces something called a minimum effective tax rate.
From now on, companies that earn fifty billion naira or more, or that are owned by foreign investors (also known as multinational companies), must pay at least fifteen percent tax, no matter what they report as profit.
This rule ensures that all big players contribute their fair share to the economy.
5. Personal Income Tax Has Been Simplified
For everyday people and individual business owners, there is some good news too. The first eight hundred thousand naira of your annual income is now completely tax-free.
After that, your income will be taxed using a new, simpler rate that goes up as you earn more. The highest rate you will ever pay is twenty-five percent, which is lower than before.
If you earn a modest income, you will now get to keep more of your money.
6. Electronic Invoicing and Record-Keeping
One of the recent tax reforms in Nigeria is the introduction of electronic invoicing. From July 2025, large companies (those earning five billion naira or more per year) must start using government-approved software to send and record invoices.
This rule will expand to include medium and small businesses over the next two years.
This would make it easier to keep track of your business transactions and taxes. It also reduces the risk of fraud, double payments, or fake receipts.
If you are a freelancer, digital service provider, or small business owner, now is the time to start learning how to issue and store invoices electronically. This would help you avoid penalties and stay ahead of the law.
7. The Federal Inland Revenue Service Has a New Name and Role
The agency we used to know as the Federal Inland Revenue Service is now called the Nigeria Revenue Service. This new agency will oversee all tax matters across the country.
Also, a new position called the Tax Ombudsman has been introduced. The Tax Ombudsman is like a referee who listens to complaints from taxpayers and makes sure they are treated fairly.
So if you ever feel that you have been unfairly treated by a tax officer or that your rights as a taxpayer were ignored, you can now report it to the Tax Ombudsman.
How Do These Reforms Affect You?
If you are an individual, freelancer, or business owner, here is what these recent tax reforms in Nigeria mean for you:
If You Run a Small Business:
- You may not need to pay company income tax or capital gains tax anymore.
- Keep good records of your income and business assets.
- Reinvest more money into your business without worrying about heavy taxes.
If You Own a Medium or Large Company:
- You must now pay the four percent development levy.
- Comply with electronic invoicing rules starting in 2025 or 2026.
- Your business may be affected by the fifteen percent minimum effective tax rule.
If You Are an Individual:
- The first eight hundred thousand naira is now tax-free.
- You pay income tax based on a new, fairer rate.
- It’s now possible to report any issues with tax officials to the Tax Ombudsman.
If You Are a Freelancer or Work Online:
- You will need to register for value added tax if your income qualifies.
- You must begin issuing electronic invoices for your services.
- Your digital services may now be taxed more clearly under the law.
How Can You Benefit from The Recent Tax Reforms in Nigeria?
These reforms are not just about taking more taxes from you. They are also designed to help you grow. Here are some smart steps you can take:
- Register your business properly so that you qualify for small business exemptions
- Use digital tools to track your income, expenses, and invoices
- Speak to a tax advisor or accountant before making major sales or investments
- Avoid last-minute tax filing—plan your year in advance so you never pay more than you should
- Invest in areas that qualify for government incentives, such as agriculture, technology, or infrastructure
When you understand the system and follow it correctly, you can keep more of your money, avoid stress, and focus on growing your income.
Conclusion
Tax does not have to be scary. The recent tax reforms in Nigeria tax are here to make things simpler, fairer, and more transparent for everyone.
Whether you are a small business owner, freelancer, or employee, you now have a better chance of building a financially secure future without being overwhelmed by confusing tax laws.
If you are not sure where to begin, the best time to start learning is now. The earlier you understand these changes, the easier it will be to benefit from them.
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