As implementation of the tax reforms gathers pace, the changes are beginning to reveal a shift in the country’s tax philosophy away from taxing business survival toward taxing profitability, a move government officials say is aimed at supporting investment, easing pressure on struggling firms, and stimulating economic growth.
But while authorities insist the reforms will simplify tax administration and reduce compliance burdens, businesses and taxpayers are still seeking clarity on how several provisions will work in practice.
Officials of the Nigerian Revenue Service (NRS) say the new framework is designed to eliminate some of the rigid tax provisions that weighed on businesses under the previous regime, particularly for companies operating under difficult economic conditions.
“We want to tax prosperity and not poverty, and we will be taxing the fruit and not the seed,” Obinna Ihedioha, executive director of people, stakeholders, and communications at the NRS, said while explaining the thinking behind the reforms during the agency’s stakeholders engagement webinar series.
His comments reflect one of the central policy shifts embedded in the four new tax laws that took effect on January 1, 2026. The laws replaced Nigeria’s fragmented tax structure with a harmonised framework comprising the Nigerian Tax Act, the Nigerian Tax Administration Act, the Nigerian Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act.
A major feature of the reform is the overhaul of Nigeria’s minimum tax regime, which previously required companies to pay taxes even when they were making losses.
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Kehinde Kajesomo, director of the competent authority at the NRS, said the new rules are intended to reduce pressure on businesses that are yet to return to profitability.
“The new minimum tax does not tax losses,” Kajesomo said. “If a company has made a loss, it is not required to pay the minimum tax under the new rule.”
Under the old system, companies that failed to make profits were still subject to minimum tax obligations. This policy had long drawn criticism from businesses, particularly during periods of high inflation, currency volatility, and weak consumer demand.
The reforms now limit the minimum tax largely to multinational groups captured by the OECD’s global minimum tax framework and to companies with annual turnover above N50 billion whose effective tax rates fall below 15 percent.
According to Kajesomo, the objective is to “promote entrepreneurship and reduce tax burden on small businesses,” while also ensuring Nigeria does not lose revenue to other jurisdictions implementing global tax rules.
The reforms also expand the threshold for small business tax exemptions. Companies with annual turnover below N100 million and assets below N250 million now qualify as small companies and are exempt from company income tax, compared to the previous N25 million threshold.
Government officials say the changes are intended to improve competitiveness and simplify compliance in Africa’s largest economy.
“We had laws that were almost 100 years in existence,” Kajesomo said. “The essence of this reform was to harmonise our tax laws so that when you are looking for provisions on taxation, you don’t need to go through many laws.”
Beyond company income tax, the reforms introduce a simplified capital allowance regime, remove the standalone capital gains tax structure, and allow capital losses to offset taxable profits, changes analysts say could influence investment decisions and corporate restructuring activities.
Still, despite the government’s push for simplification, taxpayer concerns over implementation continue to surface.
Questions raised during the stakeholder engagement reflected uncertainty around the status of previous finance acts and modification orders, migration to the new REV360 digital platform, and whether professional service providers classified as small businesses still qualify for certain exemptions.
Participants also sought clarification on overlapping tax obligations between federal and state authorities, especially around withholding taxes and levies.
In response, Kajesomo acknowledged that implementation remains an evolving process and indicated that further guidance may be issued where necessary.
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“The first thing to check is the new law,” he said while responding to concerns over older regulations. “If the provision is not repealed and is consistent with the new law, then it may still apply.”
The reforms are also expected to deepen digital tax administration through mandatory electronic invoicing, automated VAT processes, fiscalisation systems, and integrated taxpayer databases aimed at improving compliance and reducing leakages.
Ihedioha said the reforms are intended to create a tax system that is “simpler, more transparent, technology-driven and aligned with global best practice.”
For many businesses, however, the success of the reforms may depend less on the ambition behind the policy and more on how effectively the government manages implementation and taxpayer education in the months ahead.
The volume of questions raised by taxpayers suggests that while the reforms may ultimately modernise Nigeria’s tax framework and ease some compliance burdens, understanding of the new system remains uneven as businesses prepare to file returns under the new regime.