By Pius Ebong
Nigeria’s sweeping tax reform, signed into law in June 2025 and scheduled to take effect from January 1, 2026, is one of the most far-reaching fiscal changes since independence. Designed to modernise tax administration, widen the revenue base and ease the burden on low-income earners, the new framework has been promoted by the Federal Government as a cornerstone of economic reform.
However, beyond public confusion and political resistance, the reforms have become embroiled in a serious institutional controversy: allegations by the House of Representatives that the gazetted version of the tax law differs materially from the version passed by the National Assembly. This article examines the substance of the new tax law, its implications for Nigerians, and the growing controversy surrounding its legitimacy.
What is the new Nigerian Tax Law?
The tax reform package consists of four interrelated Acts:
1. Nigeria Tax Act, 2025
2. Nigeria Tax Administration Act
3. Nigeria Revenue Service Act
4. Joint Revenue Board Act
Together, they repeal and consolidate numerous existing tax laws, including those governing companies income tax, personal income tax, value added tax and stamp duties. The objective is to simplify compliance, reduce duplication, close loopholes and align Nigeria’s tax system with modern economic realities, including the digital economy.
Key provisions Nigerians should understand
Personal Income Tax Relief
A major highlight of the reform is the increase in the tax-free income threshold. Nigerians earning ₦800,000 or less annually will pay zero personal income tax, a measure aimed at protecting low-income earners amid inflationary pressures. Taxation above this threshold remains progressive, with rates rising to a maximum of 25 percent for high earners.
The former Consolidated Relief Allowance has been replaced with more specific deductions, including rent relief, capped to prevent abuse.
Businesses and corporate taxation
Small businesses with modest turnover and asset bases are exempt from several taxes, including Companies Income Tax and Capital Gains Tax, in a bid to support entrepreneurship and job creation.
For larger corporations, the reforms introduce a lower headline corporate tax rate while enforcing a minimum effective tax rate to curb tax avoidance. Multiple sector-specific levies have been merged into a single Development Levy, simplifying compliance.
The reforms also strengthen the role of the Tax Identification Number (TIN) as a central compliance tool, linked to existing identity systems.
The doctoring allegation: A constitutional flashpoint
Beyond policy debates, the most troubling controversy emerged from the House of Representatives, which publicly alleged that the version of the tax law published in the official government gazette does not fully reflect what lawmakers passed.
According to lawmakers, certain clauses in the gazetted version were either altered, added or removed without the knowledge or approval of the National Assembly. The House described the situation as a potential breach of legislative authority and vowed to investigate how the discrepancies occurred.
This allegation has raised profound constitutional questions: Who has custody of a bill after passage? At what point does a law become immutable? And can any arm of government lawfully alter legislation after parliamentary approval?
As of now, the executive arm has not formally admitted to any wrongdoing, while relevant committees of the House have indicated they may summon officials involved in the gazetting process. Legal experts warn that if the allegations are substantiated, affected provisions could be challenged in court, potentially delaying implementation.
Other sources of public controversy
Public anxiety has also been fuelled by misinformation, particularly claims that Nigerians without TINs could lose access to bank accounts. Authorities have since clarified that basic banking access is not automatically tied to tax compliance.
There has also been resistance from some state governments, especially over VAT distribution and revenue allocation, with fears that economically weaker states could be disadvantaged. These concerns are compounded by a harsh economic climate marked by fuel subsidy removal, inflation and rising living costs, making any tax-related reform politically sensitive.
What the law means for ordinary Nigerians
If implemented as intended, the reforms promise tax relief for low-income earners, simplified rules for businesses and a broader tax net that captures previously untaxed sectors. However, the unfolding dispute over the gazetted version of the law has introduced uncertainty.
For many Nigerians, confidence in the reforms will depend not just on policy outcomes, but on transparency, constitutional fidelity and institutional accountability.
Looking ahead
With the implementation date approaching, clarity is urgently needed. The government must reconcile any discrepancies between the passed and gazetted versions of the law, while intensifying public education on the reforms.
Taxation is a social contract. For it to succeed, citizens must trust not only the fairness of the system, but also the integrity of the lawmaking process itself. How Nigeria resolves the current controversy may ultimately determine whether this ambitious tax reform becomes a milestone—or a missed opportunity.
