Nigeria’s Federal Government has unveiled plans to aggressively increase its tax-to-GDP ratio from less than 10% to at least 18% within three years, leveraging new tax laws signed by President Bola Tinubu. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, explained that the reforms are designed to address the country’s large tax gap—estimated at 70%—and improve revenue collection efficiency.
Speaking on Arise TV, Oyedele described the current tax yield as “embarrassing” compared to other African countries and developed economies. The new legislation includes the Nigeria Tax Bill, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Bill, all aimed at making tax evasion more difficult and compliance easier.
Key changes include exempting individuals earning less than ₦1 million annually from personal income tax, a significant increase from the previous threshold of ₦300,000. Small businesses with annual turnover below ₦50 million will also be exempt from company income tax. Corporate tax remains at 30%, while VAT is reduced to 7.5% with exemptions on essential goods and services such as food, education, healthcare, rent, and public transport.
Oyedele highlighted that the reforms will not raise taxes but close the tax gap by more than half, effectively doubling tax revenue. He also stressed that the reforms aim to rebuild trust between citizens and government through greater transparency and accountability in revenue usage.
He praised President Tinubu’s political courage in implementing the reforms despite opposition, stating, “This should have been done 30 years ago.” The reforms are expected to ease the tax burden on low-income earners and small businesses, leaving more money in their hands for daily needs.