By Kabiru Abdulrauf
Nigeria is set for one of its most ambitious fiscal transformations in decades as the federal government unveils a new tax regime that takes effect on January 1, 2026. The policy introduces a 5% annual tax credit for multinationals and local firms investing in priority sectors, alongside top-up tax exemptions for companies with turnover below ₦50 billion and €750 million respectively. Businesses involved in foreign currency transactions will also be allowed to remit taxes in naira at the official exchange rate a move analysts say could boost investor confidence and stabilise compliance.
According to the chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, the reform marks a decisive shift in how Nigeria approaches taxation not merely as a fiscal exercise, but as a “social contract” between citizens and government. “Taxation is not just a revenue tool; it’s a pillar of trust. When citizens see transparency and accountability in how taxes are used, compliance naturally follows,” Oyedele said, emphasising the need to improve tax literacy across all sectors.
Under the new structure, micro and small enterprises, which account for nearly 48 percent of Nigeria’s GDP and over 80 percent of its workforce, will enjoy significant relief. Companies with an annual turnover below ₦100 million and fixed assets under ₦250 million will be fully exempted from corporate tax, while larger corporations will see their tax rate reduced from 30 to 25 percent, pending presidential approval. The policy aims to ease compliance burdens, promote business formalisation, and attract fresh investment.
However, the Association of Small Business Owners of Nigeria (ASBON) has expressed cautious optimism, warning that challenges such as multiple taxation and informal levies at the local government level could erode the reform’s impact. “Without tackling local taxes and bureaucratic hurdles, small businesses may not feel the relief this policy promises,” ASBON President, Dr Femi Egbesola, said. He called for inclusive stakeholder engagement and simplified tax processes to strengthen implementation.
The reform has drawn commendation from economic groups like the Centre for the Promotion of Private Enterprise (CPPE) and the Civil Society Legislative Advocacy Centre (CISLAC). CPPE chairman, Dr Muda Yusuf, described it as “a bold step toward equity and efficiency,” highlighting the elimination of redundant levies and the introduction of incentives that encourage productivity. CISLAC’s Executive Director, Auwal Musa Rafsanjani, however, cautioned that success will depend on transparency and accountability in revenue use, stressing that corruption and weak enforcement could derail progress.
Beyond tax incentives, the reform also seeks to streamline administration by reducing the multiplicity of taxes and strengthening expenditure tracking. Oyedele called for stronger public audits and adherence to corporate governance codes in the public sector to ensure fiscal discipline. “Government must be governed by the same principles it expects from businesses, transparency, accountability, and value for money,” he said.
As Nigeria looks to expand its non-oil revenue base and rebuild public trust, experts agree the 2026 tax reform offers both promise and risk. Its success will depend on consistent policy execution and citizen confidence in how public funds are managed. In Oyedele’s words, “Taxation works best when both government and citizens hold up their ends of the bargain.”
