• Banks to play key role against tax evasion
• Who should not pay the new tax?

According to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, under the new tax laws, Nigerian households earning ₦250,000 or less per month are classified as poor and exempt from paying taxes.

The former tax leader at PriceWaterhouseCoopers (PwC) stated this during an interview on Channels Television’s Politics Today, a few hours after President Bola Tinubu assented to four new tax bills.

Oyedele, whom the President appointed in July 2023, described his two-year stint as chair of the tax reform committee as both eventful and challenging.

He said that the objectives of the new laws, which would take effect from January 2026, were not intended to increase taxes but to stimulate economic activity in the country and track tax evaders.

Oyedele further said that the new laws would also protect businesses and ensure that the government doesn’t tax poverty, adding that the new laws were efficiency-driven, growth-focused, and people-centric.

“This tax law will not give you cash in your pocket but at least, it won’t take your cash away if you are poor.”

He said nobody earning below ₦250,000 would have to pay taxes because they don’t even have enough.

“We have eliminated the tax component for people at the bottom. We have reduced it for people at the middle, and we have increased slightly for people at the top.

“That middle, we estimated it at about ₦1.8 to ₦2 million a month. If you are earning that amount and below, your tax will not be zero but it will reduce from what you are paying today,” he stated, noting that those who earn this amount are about 5 per cent of the total Nigerian population.

Individuals earning NGN800,000 or less per annum will now be exempt from tax on their income and gains, while higher income earners will be taxed at a higher rate up to 25 per cent. The Act also increases the tax exemption threshold for compensation for loss of employment or injury from N10 million to N50 million.

Nigerians earning N108, 000 not N250, 000 per month exempted

While Nigerians were trying to digest the statement by the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, he clarified that only Nigerians earning N108,000 or less monthly (equivalent to N1.3 million annually) are exempted from paying income tax under the new tax reform bills signed into law by President Bola Tinubu.

Oyedele made the clarification after his statement on Channels Television’s Politics Today, which indicated that Nigerians earning N250, 000 or less monthly are now classified as poor and would be exempted from paying tax.

He explained that the N250, 000 threshold referred to households, not individuals.

“This is not an accurate account of what I said. For clarity, my reference to N250, 000 was in the context of a household, not an individual,” Oyedele wrote in a post on X, formerly Twitter.

“The monthly tax exemption threshold for an individual is N108, 000 (N1.3 million annually). I hope this clears up any misunderstanding.”

The President Bola Tinubu government had earlier assured Nigerians that the new tax laws, which will take effect from January 2026, were targeted at protecting businesses, ensuring poverty is not taxed, providing relief to low-income earners, tracking tax evaders, and promoting economic growth.

NASS or State House of Assemblies will grant approval for exemption

Meanwhile, indication is that with the newly passed Nigeria Tax Administration Act, 2025, the President or State Governor are under obligation to obtain the approval of the National Assembly and States Houses of Assembly for Federal and State taxes respectively, where the President or Governor intends to remit taxes payable by a taxable person.

The recommendation was encapsulated in the Section 74 of the Nigeria Tax Administration Bill approved by the House of Representatives with concurrence of the Senate.

The lawmakers also approved the provisions for the exemption of the personnel of Military Forces and other such Security Agencies from Personal Income Tax, in recognition of the sacrificial services these individuals render in keeping Nigerians safe.

“Section 74 – Power of the President or Governor to Remit Taxes: Inclusion of the need to obtain the approval of the National Assembly and States Houses of Assembly for federal and state taxes respectively, where the President or Governor intends to remit taxes payable by a taxable person.

“Section 75 – Power of the President to Exempt Companies from Income Tax: Inclusion of the need to obtain the approval of the National Assembly, where the President intends to exempt any person or class of income/profits from tax.”

Banks to play role on ascertaining incomes from 2026

Determined to ensure that Nigerians are accurately assessed for tax payment, the Federal Government has mandated banks to report all customer accounts with monthly transactions exceeding ₦5 million to the Federal Inland Revenue Service (FIRS) and other tax authorities, effective January 2026.

Sunday Telegraph learnt that this directive is part of the 2025 Tax Reform Act, aimed at strengthening tax compliance and promoting financial transparency.

Under Section 30 of the Act, commercial banks must monitor and submit monthly reports of high-value transactions to relevant tax bodies.

The National Orientation Agency (NOA) announced the measure on its official social media, highlighting its role in ensuring taxable income is properly accounted for, especially from informal and high-net-worth sectors.

The reform also introduces taxpayer-friendly provisions, including: Raising the personal income tax exemption threshold to ₦800,000 annually (₦66,667 monthly), up from ₦500,000, to ease the burden on low-income earners.

Exempting capital gains from the sale of a primary residence under Section 31

Under this, there is exclusion of compensation up to ₦10 million for injury, job loss, or defamation from taxable income under Section 50.

Additionally, the Value-Added Tax (VAT) revenue distribution model will change from 2026: the Federal Government’s share reduces to 10 per cent (from 15 per cent), state governments’ share increases to 55 per cent (from 50 per cent), and local governments retain 35 per cent.

IMPI: It’s more transformative than any policy deployment in a generation

The Independent Media and Policy Initiative (IMPI) said that the new tax reforms would go down in the country’s history as President Bola Tinubu’s major legacy to Nigerians.

This, according to the group, was because of the potential of the new laws to transform the Nigerian economic space more than any policy deployment in a generation, if well implemented.

In a statement by its Chairman, Dr. Omoniyi Akinsiju, IMPI noted that it came to that conclusion after a cursory look at the Nigeria Tax Act (NTA) 2025.

It said: “In the tradition of objective analysts, we have reviewed the new tax laws within the framework of policy conceptuality, realism, and pertinence. Our verdict is that Nigeria’s federal administration, led by President Tinubu, has gifted the country a body of legacy fiscal policies with the potential to transform the Nigerian economic space more than any policy deployment in a generation.

“Based on our evaluation, the four tax acts — the Nigeria Tax (Fair Taxation) Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act — meet all the fiscal conditions required for accelerated and inclusive economic growth.

“By our reckoning, these tax reforms, as reflected in the substance of the four tax acts, alongside the removal of fuel subsidies and the harmonisation of foreign exchange transactions windows, are at the heart of the coordinated effort to reset the Nigerian economy on a sustainable and inclusive growth path.

“The ideal tax system raises essential revenue without excessive government borrowing. It should also do so without discouraging economic activities or deviating too much from tax systems in other countries.

“On this count, we submit that President Tinubu has accomplished multiple fiscal objectives in a single strategic manoeuvre, consolidating and reshaping Nigeria’s fragmented and complex tax architecture and emphasising rebuilding trust in the system.

“The new tax regime promotes tax compliance through fairness and positions the country as an attractive destination for domestic and foreign investments. In this light, Nigeria has just now commenced its long-held crystallisation of its economic renaissance”.

The group also pointed out that the new tax law has multiple provisions targeted at boosting domestic and foreign investment.

IMPI further said: “With the implementation of the Nigerian tax laws starting in January 2026, foreign direct investment inflows into the country are expected to be reinvigorated. A major thrust in this regard is the adoption of the Minimum Effective Tax Rate (ETR) in the Nigerian Tax Act 2025 and other fiscal measures.

“Whereas the normal company income tax rate on a large company in Nigeria is 30 per cent of the company’s profit, with the adoption of the ETR, Nigerian companies that are members of a multinational group with an aggregate group turnover of 750 million euros and above or have an annual turnover of N50 billion and above will now be subject to ETR of 15 per cent of their net Income.

“The goal is to avoid the double taxation of dividends and unrealised gains or losses. This reduction in tax rates and clarity around double taxation for multinational companies will undoubtedly influence the flow of global capital to Nigeria.”

The group stated that in addition to introducing the Economic Development Incentive, which replaces the “pioneer” tax holiday incentive. This incentive introduces a 5 per cent tax credit per annum for 5 years on qualifying capital expenditure purchased by eligible companies within 5 years, effective from the production date.

The Act further provides that if a company has unused tax credits or qualifying capital expenses, it can carry them forward for 5 years. The EDI effectively reduces the company’s income tax obligation for a five-year consecutive period if it is part of a multinational group. Another attraction for global entrepreneurial capital is the prospect of establishing a residence in Nigeria.

In addition, the tax exemption threshold for selling company shares in Nigerian companies has been increased to N150 million in any 12 consecutive months, provided that the gains do not exceed N10 million. This is another ease-of-doing-business policy.

According to IMPI, the overall tax structure, including the progressivity of income taxes, can influence income distribution and aggregate demand, affecting economic growth. This is substantially reflected in the NTA 2025. Section 56 of the Act stipulates that small companies with a gross turnover of N100 million or less per annum and total fixed assets not exceeding N250 million now enjoy zero per cent income tax,” it said.