The Nigerian government has introduced the New Nigeria Tax Reform Bill 2026, a landmark legislation that is set to reshape the country’s taxation system. This article explores the content of the bill, its implications for individuals and businesses, and how it fits into Nigeria’s broader economic strategy.
Background of the Tax Reform Bill
Nigeria has been working on comprehensive tax reforms for years as part of its efforts to reduce reliance on oil revenue and increase non-oil tax collections. The New Nigeria Tax Reform Bill 2026 continues this trajectory, following the signing of multiple tax acts in 2025. The aim is to simplify tax administration, broaden the tax base, and align Nigeria’s fiscal policies with international best practices.
According to PwC Nigeria, the reforms represent one of the most ambitious overhauls of the country’s tax framework in decades. The bill consolidates several outdated laws, introduces new administrative structures, and creates a more progressive taxation model.
Key Features of the Bill
The New Nigeria Tax Reform Bill 2026 focuses on four major areas: individual income tax, corporate and business taxation, value-added tax (VAT), and revenue administration. Each of these areas introduces significant adjustments designed to improve fairness and compliance while encouraging economic growth.
Changes to Individual Income Tax
One of the most important aspects of the bill is the overhaul of personal income tax. The income tax system is redesigned to be more progressive, ensuring that higher earners contribute a greater share of tax revenue while protecting low-income individuals from excessive burden.
Highlights include:
- An exemption for individuals earning up to ₦800,000 annually.
- The removal of the Consolidated Relief Allowance (CRA) and the introduction of a rent relief allowance capped at ₦500,000.
- Clearer definitions of residency, with residents taxed on their worldwide income.
- Stricter compliance requirements, including documentation for relief claims.
As explained by KPMG, these measures aim to modernize the system and reduce tax evasion, particularly by high-net-worth individuals.
Corporate Taxation and Business Incentives
The corporate tax system also undergoes significant restructuring. The New Nigeria Tax Reform Bill 2026 introduces incentives for small and medium-sized enterprises (SMEs) while ensuring that large corporations pay their fair share.
Key provisions include:
- Exemptions for companies with turnover under ₦100 million and fixed assets below ₦250 million.
- The possibility of a reduced corporate tax rate of 25% for certain businesses, compared to the traditional 30%.
- The introduction of a 15% minimum effective tax rate for multinational groups to align with global standards.
- A consolidated development levy of around 4% on assessable profits for larger companies, replacing multiple sectoral levies.
These measures are expected to stimulate entrepreneurship, attract investment, and reduce administrative duplication. According to BusinessDay, the reforms will make Nigeria a more competitive environment for business while protecting revenue streams.
Value-Added Tax (VAT) Adjustments
The bill maintains VAT at 7.5%, contrary to earlier proposals to raise the rate. This decision helps prevent additional strain on consumers while still improving compliance and collection efficiency.
Key VAT changes include:
- Expanded zero-rated and exempt categories for essential goods such as food items, medicines, and educational materials.
- Enhanced digital compliance mechanisms for VAT filings and invoicing.
- Clearer rules for input VAT deductions, especially for businesses engaged in cross-border transactions.
As EY notes, these changes are designed to balance government revenue goals with the need to protect household spending power.
Revenue Administration and Institutional Reforms
Beyond tax rates and reliefs, the bill restructures the entire tax administration framework. The Federal Inland Revenue Service (FIRS) will be replaced by the Nigeria Revenue Service (NRS), with a broader mandate and stronger enforcement powers.
Institutional changes include:
- Digitalization of tax administration, including e-filing and taxpayer registries.
- Strengthened dispute resolution mechanisms.
- Coordination through a new Joint Revenue Board to streamline federal and state tax collection.
- Greater emphasis on compliance monitoring and penalties for evasion.
According to Andersen Nigeria, the NRS will have more autonomy and capacity to enforce compliance compared to its predecessor.
Impact on Individuals
For individuals, the New Nigeria Tax Reform Bill 2026 represents both opportunities and challenges. Low-income earners stand to benefit from tax exemptions, while middle-income and higher-income individuals may see an increase in their effective tax liabilities. Rent relief offers some compensation, but it requires proper documentation.
The clearer residency rules also mean that Nigerians living abroad for extended periods may still face tax obligations depending on their ties to the country. This brings Nigeria in line with global standards for taxation of residents.
Impact on Businesses
For small businesses, the reforms offer relief through exemptions and reduced compliance burdens. For larger corporations, however, the consolidated levy and minimum effective tax rate could increase their obligations. This shift reflects the government’s strategy to ease the burden on SMEs while ensuring big corporations contribute fairly.
Businesses will also need to adapt quickly to digital compliance requirements, update their accounting systems, and prepare for stricter audits. Multinational companies in particular must reassess their tax planning strategies under the new global minimum tax framework.
Economic and Social Implications
The broader goal of the New Nigeria Tax Reform Bill 2026 is to increase Nigeria’s tax-to-GDP ratio, which has historically been one of the lowest in Africa. By simplifying tax administration, reducing loopholes, and broadening the base, the government aims to generate more revenue for infrastructure, healthcare, and education.
Socially, the bill attempts to balance equity and efficiency. Exemptions for low-income earners and zero-rated essential goods protect vulnerable households, while higher rates for wealthier individuals and corporations increase fairness in revenue collection.
Still, there are concerns about implementation. Stricter compliance could burden some businesses, and the introduction of fuel surcharges may impact household energy costs if not carefully managed. Reuters reports that the government has already delayed parts of the law to avoid worsening the cost-of-living crisis.
Preparing for the Transition
With the bill scheduled to take effect from January 2026, individuals and businesses must prepare for the changes ahead. This includes reassessing tax planning strategies, updating payroll and accounting systems, and ensuring documentation is in place for relief claims. Professional tax advisory services will play a critical role during this transition period.
SMEs should take advantage of the exemptions and reliefs offered, while larger corporations need to review their structures to remain compliant under the new regime. For individuals, keeping proper financial records and understanding new residency rules will be crucial in avoiding penalties.
Conclusion
The New Nigeria Tax Reform Bill 2026 is a comprehensive and transformative piece of legislation. By modernizing tax laws, improving administration, and introducing progressive structures, it seeks to make Nigeria’s fiscal system more efficient, equitable, and aligned with global standards.
For individuals, businesses, and policymakers alike, the coming year will be critical in preparing for and adapting to these changes. Success will depend on effective implementation, robust digital infrastructure, and ongoing dialogue between government, taxpayers, and stakeholders.
Ultimately, if executed well, the bill has the potential to boost revenue, enhance fairness, and strengthen Nigeria’s economic resilience in a rapidly changing global environment.
