The implementation of the new tax laws scheduled to begin in January 2026 under the administration of President Bola Ahmed Tinubu, in the midst of insecurity, endemic corruption, high inflation, an unsteady economy, and an unstable Naira, has sparked intense debate. Many Nigerians are concerned about the potential negative impact these laws may have on the economy despite the stated intention of increasing revenue and improving the business environment.
The five pieces of legislation slated to commence on 1 January 2026 are:
- Nigeria Tax Act 2026 (also called the Nigeria Tax (Fair Taxation) Law), the core tax code consolidating dozens of existing statutes.
- Nigeria Tax Administration Act 2026, which sets uniform rules for tax collection across federal, state, and local governments.
- Nigeria Revenue Service (Establishment) Act 2026, which creates the new Nigeria Revenue Service (NRS) to replace the FIRS and gives it broader powers.
- Joint Revenue Board (Establishment) Act 2026, establishing a Joint Revenue Board to coordinate tax policies among the three tiers of government and introducing a Tax Ombudsman.
- Nigeria Tax Bill (Ease of Doing Business) 2026, the umbrella reform package introducing the four Acts above and steering the country toward a more digital, transparent tax system.
Collectively, these five statutes form the “2026 tax reforms” which will reshape Nigeria’s fiscal and tax landscape.
Proponents argue that the reforms will simplify tax collection, streamline processes, and reduce bureaucracy. They claim the laws will relieve low-income earners by exempting individuals earning below ₦800,000 annually from income tax, and support small businesses by exempting them from income tax — thereby fostering economic growth. Ultimately, the impact of President Tinubu’s tax laws will depend on effective implementation and the government’s willingness to address corruption concerns.
However, critics question the timing. They cite pressing challenges such as insecurity, corruption, economic instability, food scarcity, and high inflation. Many argue that these problems should take priority, as increasing taxes could further burden citizens and small/medium businesses, worsening economic hardship.
Enacting tax laws at this moment remains contentious. While tax reforms are often necessary to boost revenue, improve economic stability, and enhance the business environment, the timing and context in Nigeria raise serious concerns.
President Tinubu’s administration insists that the reforms will promote growth, attract investment, and support development. The laws include measures to exempt small businesses, reduce corporate tax rates, and introduce VAT exemptions for essential goods.
Tax Inspectors Without Borders: Influence or Coincidence?
One cannot help but ask: Are these new tax laws a script written by the Tax Inspectors Without Borders (TIWB) and implemented by the current administration?
TIWB is a joint initiative of the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP), launched in July 2015. Its primary goal is to support developing countries in strengthening tax audit capacity and combating illicit financial flows — allegedly to help finance the Sustainable Development Goals (SDGs). But again, one must ask: Are these reforms truly for Nigeria’s benefit or to service foreign interests and global financial structures?
Governments rarely introduce new tax laws without purpose. Generally, these laws fall into four categories:
funding public needs, steering human behaviour, fixing economic gaps, and modernizing outdated systems.
1. Revenue Generation (Funding the State)
This is the most direct reason for new tax laws. Governments require money to function, but old tax laws often fail to generate enough revenue as economies evolve.
Revenue funds everything from schools, hospitals, markets, roads, and defence.
Key drivers include:
- Funding infrastructure and modern services
- Servicing national debt
- Expanding the tax base to include new digital sectors
2. Behavioural Engineering (Steering Choices)
Governments use taxes to encourage or discourage certain behaviours. Examples include:
- Sin taxes on tobacco, alcohol, sugary drinks
- Green taxes on carbon-intensive products
- Tax incentives for renewable energy, electric vehicles, etc.
3. Social Equity (Redistribution)
Tax laws are often updated to reduce inequality.
Examples:
- Progressive taxation targeting high earners
- Exemptions for low-income earners
- Capital Gains Tax aimed at wealthier individuals and corporations
4. Modernization and Efficiency
New tax laws may also aim to:
- Simplify complex tax codes
- Reduce corruption and loopholes
- Formalize informal sectors
- Manage externalities like pollution
- Protect domestic producers using import duties
In short, tax laws are tools for raising funds, shaping behaviour, promoting fairness, and protecting national interests.
Concerns Surrounding the New Tax Regime in Nigeria
Regardless of the intentions, the effectiveness of Nigeria’s new tax laws will depend on implementation, tackling corruption, and ensuring that benefits reach the public.
Below are key concerns:
1. Increased Financial Burden
Higher taxes will burden individuals and businesses already struggling due to inflation and poor economic conditions. SMEs may be discouraged from expanding, reducing job creation and economic growth.
2. Widening Economic Inequality
The new laws may disproportionately affect lower and middle-income earners, widening the gap between the rich and the poor. Small businesses could face disincentives, reduced access to credit, and higher compliance costs.
3. Corruption Risks
Corruption may undermine the reforms due to:
- Complex regulations
- Discretionary powers of tax officials
- Weak enforcement mechanisms
- Revenue pressure on officials
- Lack of whistle-blower protections
- Political interference
- Poor training and insufficient resources
The tax environment could become fertile ground for fraudulent practices, further eroding public trust.
4. Impact on Public Services and Cost of Living
Higher taxes may lead to increased prices of goods and services, worsening inflation and reducing purchasing power. Investors could relocate to tax-friendly jurisdictions. Digital services may become more expensive. Mismanagement of tax revenues could worsen public services.
5. Unforeseen Macroeconomic Repercussions
Pursuing a high tax-to-GDP ratio amid economic fragility could trigger unexpected crises — especially when combined with subsidy removal and naira floatation.
Large revenues may be misallocated to political patronage rather than development projects.
6. Regional Disparities
A proposed change in the VAT-sharing formula has triggered controversy. Northern states fear that shifting the basis toward consumption will disproportionately favour southern states, worsening fiscal inequality and undermining federal balance.
7. Negative Impact on Capital Importation
Foreign investors may be deterred due to:
- 30% Capital Gains Tax on corporate entities
- Top-up taxes on multinationals
- Complex documentation requirements
- Mandatory repatriation through authorised dealers
- Regulatory uncertainty
Professional compliance systems and restructuring may be necessary for businesses to adapt.
Is This the Right Time for New Tax Laws?
Given Nigeria’s current state — insecurity, unstable currency, unemployment, weakened agriculture, and widespread corruption — the introduction of new tax laws seems ill-timed.
Key concerns include:
- Economic instability
- Security challenges
- Rampant corruption and poor accountability
- Food scarcity and inflation
- Negative public sentiment
There are also unconfirmed reports that Western-backed tax consultants under TIWB are encouraging African countries to implement aggressive tax regimes to service foreign debt — raising questions about sovereignty and transparency.
Conclusion
While tax reform is important for national development, these new laws risk worsening financial strain, inequality, and social unrest if introduced without addressing deeper structural issues.
The government must prioritize transparency, accountability, and strong governance frameworks. Simplifying tax laws, training officials, and strengthening institutions is essential.
But ultimately, this may not be the right time to introduce new tax laws.
The government owes Nigerians clarity — particularly regarding any external influence such as the role of Tax Inspectors Without Borders.
The ball is now in the court of the PBAT Administration.
