AKIRS Clears Air on Nigeria’s Tax Reforms

 

...says individuals earning less than N1m are exempted from tax payment

Priscilla Akpanettot

Against widely held belief that the new tax reforms instituted by the President Bola Tinubu’s administration will force the payment of tax on all Nigerians from January 2026, the Akwa Ibom Internal Revenue Service (AKIRS), has cleared the air and allayed fears of forceful taxation on individuals and corporate entities.

Speaking on Friday, November 28, 2025 at the NUJ Press Centre in Uyo, Chairman of the AKIRS, Sir Okon Okon said that the tax reforms will rather protect low-income earners and reduce inequality for individuals earning below ₦1 million per year.

Okon who was giving a synopsis of the implication of the 4 new tax reforms with journalists said the reforms will improve fairness and transparency in the delivery of basic social amenities as well as reduce cost of living pressures.

It would be recalled that President Bola Ahmed Tinubu had on June 26, 2025 signed four key tax reform bills into law, collectively known as the Nigerian Tax Reform Acts. The reforms according to Okon Okon are aimed at overhauling the country’s fiscal governance, tax administration, and revenue generation; while improving a unified, technology-driven tax administration scheme for optimized revenue generation across tiers of government.

The AKIRS boss said the tax reform provides a simpler, unified tax system that is easier for businesses and individuals to understand and promotes improved fairness where large companies pay  minimum tax while small businesses and low-income earners receive exemptions and reliefs.

 

Furthermore, he posited that the reforms would bring about stronger digital and institutional capacity for tax collection, promote reduced duplication and multiple taxation, birth clearer investment incentives for both local and foreign investors and as well improve Nigeria’s ease of doing business.

Breaking down the reforms, the South South presidential committee member on tax reforms said that the Nigeria Tax Act, 2025 (NTA) would now ensure a comprehensive consolidation of major federal tax laws into one unified framework through the merging of CIT, PIT, VAT, CGT, Stamp Duties, Petroleum Taxes, and others into a single Act. It would as well broaden the tax base to include digital services, virtual assets, gaming, mining, petroleum operations, prizes, and grants; introduce a 4% Development Levy on assessable profits (replacing multiple old sectoral levies); implement a 15% minimum effective tax rate for large companies/MNEs; introduce Controlled Foreign Company (CFC) rules to limit profit shifting and as well updates rules on interest deductibility, capital allowances, free-zone incentives, and export tax reliefs.

Meanwhile, the Nigeria Tax Administration Act, 2025 (NTAA) which modernizes and harmonizes tax administration across all government levels will now standardize processes for tax filing, assessment, audits, and appeals, and introduce a unified digital system for taxpayers — making compliance easier and reducing bureaucracy; enhances transparency and efficiency in tax collection nationwide.

The Nigeria Revenue Service (Establishment) Act, 2025 (NRSA) now will establish the Nigeria Revenue Service (NRS), replacing the former FIRS. It centralizes federal tax collection and taxpayer registration; implements stronger automation, data integration, and compliance tools and enhances capacity for revenue intelligence and enforcement.

While the Joint Revenue Board (Establishment) Act, 2025 (JRBA) which replaces the Joint Tax Board (JTB) creates a coordinated revenue-administration body across federal, state, and local governments will now reduce multiple taxation by aligning roles across tiers of government; enable coordinated data sharing and joint enforcement and harmonize revenue policies for more predictable taxpayer obligations.

By implication, the AKIRS boss announced 50 tax exemptions and reliefs benefiting the masses to include: Personal Income Tax/PAYE, National minimum wage earners exempt, Annual income ₦1.2 million exempt, lower PAYE rates up to ₦20 million yearly income, gifts exempt, allowable Deductions, Pension contributions and NHIS contributions.

Others are: Loan interest for owner-occupied homes, Life insurance/annuity premiums, Rent Relief Allowance up to ₦500,000 or 20% of rent, Pensions & Gratuities, Pension funds under PRA exempt, Retirement benefits under PRA exempt and Loss-of-employment compensation up to ₦50 million exempt, among others.

He therefore called on members of the public to support the new tax regime, saying it was in the interest of the masses.

For Companies and Investments, the benefits include: CGT exemption for retail investors, pension funds, REITs, M&A, security lending; Capital losses deductible; No WHT on bonus shares; Stamp duty exemption on documents for stocks/shares transfers; Lower business costs via input VAT credits; CIT reduction from 30% → 25%; Harmonization of levies (TET, NITDA, NASENI, etc) and Repeal of 60+ taxes/levies down to < 10; moderation of excessive agency fees via Tax Ombud; and tax exemption for state government bonds.

‘‘Personal Income Tax exemption or final WHT on fixed income securities, lower WHT or exemptions to ease cash-flow pressures, final WHT on foreign investors’ dividends and interest, TIN exemption for foreign investors; Export Processing Zones; entities fully exempt if ≥ 75% of sales are exports; If 25% sales made locally, tax applies to local sales.’’

According to him, ‘‘From 1 January 2028, full taxation applies on all local-territory sales, Share Disposal, flat 10% CGT replaced by 0–30% progressive tax, disposals up to ₦150 million with gains ₦10 million exempt; and gains exempt if proceeds are reinvested in same year.

Commenting on implications for States and Local Government Areas, Sir. Okon stated that VAT formula was revised from 50% to 55% for States, distribution: Equity 50% | Population 20% | Derivation 30%, strengthened revenue administration and professionalism, improved compliance through Tax ID, Stamp Duties on individuals now belong fully to states, and tax harmonization eliminating multiple taxation.

‘‘States empowered to collect taxes for LGAs, consumption Tax abolished, full digitalization: e-invoicing, e-payments, no cash handling, better business environment and protection for SMEs, states administer virtual currency taxes, focus on High-Net-Worth Individuals (HNWIs), National Tax Identification Number (NTIN) for all taxpayers.’’

On implications for the Nation, Okon said it would consolidate major tax laws into a unified framework, facilitate more progressive tax system that protects the poor and boosts equity, enhanced higher tax-to-GDP ratio and reduced dependence on oil, better environment for investment and business growth, remove wasteful levies and reduction of leakages, sustain stronger accountability via the Nigeria Revenue Service, improved tax refunds, better national data, and stronger fiscal planning. As well as harmonized national taxpayer identification.

Speaking on Economic and Operational Impact, he said the tax reform frees capital for expansion and job creation, smooth transition from small to medium scale, improves cash flow and reduces administrative bottlenecks, protects struggling firms, promotes recovery, encourages staff welfare and employment growth, enhances liquidity with faster VAT recovery, promotes consolidation without tax penalties and builds trust through Ombud oversight.

Earlier, the State Chairman of Nigerian Union of Journalists, Comrade Nsibiet John Udoh, commended the Chairman of AKIRS for the thought to sensitize journalists who he said would then take the message to members of the public.

In their separate remarks, the Commissioner for Finance, Emem Bob and his Information counterpart, Rt. Hon. Aniekan Ummah called for the organisation of more trainings for journalists to enable them better educate the masses on impacts and benefits of the new tax regime.

The Commissioner for Information called on journalists to join in the campaign to sensitise the masses on the Nigeria Tax Reforms, while assuring that Governor Umo Eno’s administration would put everything in place to facilitate the smooth take off of the reforms by January 2016.