Here’s what’s actually set to change under Nigeria’s tax law starting January 1, 2026 based on official reforms and credible reporting — not social-media rumors (many of which are false or exaggerated)
1) Major overhaul of the tax system
The government consolidated multiple federal tax laws (including the Companies Income Tax, Personal Income Tax, VAT, Capital Gains Tax, Stamp Duties, etc.) into a single unified legal framework under the Nigeria Tax Act, 2025.
The goal is to simplify, modernize, and harmonize taxation across sectors and reduce overlapping tax disputes.
2) Personal income tax changes
Progressive tax structure: Individuals will be taxed based on income bands under a new progressive regime.
Tax-free floor: Annual income up to about ₦800,000 is exempt from personal income tax.
Abolition of the old Consolidated Relief Allowance (CRA): CRA is removed and replaced with a rent-relief provision (often 20% of rent or up to ₦500,000), which affects taxable income calculations.
Loss-of-employment compensation: The tax-free threshold for severance pay has been raised significantly.
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Important: There is no blanket 20 % tax on everyone earning above ₦800,000 starting January 1, 2026 — that claim circulating online is false.
3) Corporate tax and business incentives
Expanded exemption for small companies: Companies with turnover ≤ ₦100 million and fixed assets ≤ ₦250 million may be exempt from corporate income tax, capital gains tax, and the new development levy.
Broadening of tax base: Larger companies may face revised corporate rates and new rules (e.g., minimum effective tax, controlled foreign company rules) to align with global tax standards.
Export incentives: Profits from exported goods may be exempt from Nigeria corporate income tax if proceeds are repatriated legally
4) Value-Added Tax (VAT) and transaction taxes
VAT remains at 7.5 % but is expanded in scope to include digital services supplied into Nigeria (e.g., digital streaming and online platform services).
Certain essential items and services may be zero-rated or exempt, easing cost pressures for households (e.g., basic goods, transport).
5) New levies and compliance rules
A Development Levy replaces several smaller levies, simplifying the levies structure for companies.
Minimum tax rules are introduced to ensure some tax liability even for companies reporting losses, aimed at limiting avoidance.
There are more stringent anti-avoidance rules and compliance requirements, including clearer reporting and documentation.
6) Tax administration and enforcement changes
The Federal Inland Revenue Service (FIRS) has been restructured and renamed the Nigeria Revenue Service (NRS) with broader enforcement powers and digital compliance tools.
A National Tax Policy Implementation Committee is in place to coordinate rollout and guide stakeholders through the transition
7) Penalties for non-compliance
Stricter penalty provisions are defined for failures such as late filing, failure to register, refusal to allow compliance technology, or refusal to remit withheld tax. Penalties may include fines and, in serious cases, imprisonment for egregious non-compliance (e.g., assaulting a tax officer).
8) Bank and taxpayer identification changes
Banks are set to require a Tax Identification Number (TIN) for all taxable bank account holders starting in 2026, tightening tax reporting and compliance.
9) Public and political context
Government and experts stress the reforms are intended to ease tax burdens for most Nigerians and small businesses while improving fairness, transparency and revenue mobilization.
There is some political pushback and legal challenge regarding alterations to the law after passage, with calls for suspension by some figures.
Bottom line
These reforms represent the most significant rewrite of Nigeria’s tax law in decades. The focus is on simplification, expanding digital compliance, protecting low-income earners, and aligning corporate taxation with international norms. You will see new rates, exemptions, documentation requirements, penalties, and enforcement mechanisms starting with the 2026 tax year.
