As an individual living in or a business operating in Nigeria, it is important to know and try to stay ahead of governments implementations and re-structures that may affect your standard of living or may affect your business, and the new 2026 tax reforms will play a major role in the standard of living of Nigerians come 2026.
What’s Happening & Why
- The government passed four bills that together overhaul Nigeria’s tax system:
- A new Nigeria Revenue Service (NRS) law to replace the Federal Inland Revenue Service (FIRS).
- A joint revenue‐board law to coordinate tax collection across federal, state and local governments.
- A tax administration law and a tax reform act which consolidate and update many existing tax statutes (e.g., Companies Income Tax Act, Personal Income Tax Act, VAT Act, Capital Gains Tax Act).
- Implementation set for January 1, 2026, giving about a six-month transition window after signing in June 2025.
The stated purpose:
- Improve the tax-to-GDP ratio (currently low for Nigeria)
- Simplify and harmonise tax laws (reduce duplication, conflicting taxes)
- Ease burdens on lower earners, support small businesses, improve fairness of the system.
- Strengthen enforcement, reduce leakages and improve compliance
Key Changes You Should Know
For individuals
- If you earn ₦800,000 or less per year, you are now fully exempt from personal income tax under the new regime.
- New taxable income brackets and rates (effective Jan 1, 2026) — for example:
- ₦0-800,000 → 0 % tax
- ₦800,001-3,000,000 → about 15 % tax
- The top band (above ₦50,000,000) taxed at ~25 %
- The old “Consolidated Relief Allowance" (CRA) is abolished; in its place is a new Rent Relief: the lower of ₦500,000 or 20 % of annual rent paid.
- Clarification of residency rules makes clear when someone is a Nigerian tax resident (for tax on global income) vs non-resident.
For businesses/ companies
- Small / micro-business relief: Companies with turnover up to ₦100 million (and fixed assets ≤ ₦250 million) are exempt from Company Income Tax (CIT), Capital Gains Tax (CGT) and the new Development Levy.
- For larger companies:
- Capital Gains Tax for companies increases (from 10 % to 30 %) in some cases.
- Introduction of a “global minimum tax” of ~15 % for multinational firms (consistent with OECD standards) for large companies.
- More stringent penalties for non-compliance: failure to register, file returns, etc will incur higher fines.
Expected Benefits and Challenges
Benefits
- Simplified tax system: Fewer, clearer rules reduce confusion and compliance costs.
- Equity and fairness: Lower-income earners and SMEs get relief, while wealthier individuals and large firms contribute more.
- Improved revenue mobilization: A unified structure should reduce leakages and increase Nigeria’s tax-to-GDP ratio.
- Digital transformation: Automated processes will speed up filing and improve data accuracy.
Challenges
- Implementation capacity: Training tax officers and upgrading IT systems nationwide will take time.
- Public sensitization: Many taxpayers are still unaware of their new rights and obligations.
- Economic strain: Businesses already grappling with inflation and high energy costs may find compliance challenging if not supported with guidance and incentives.
- Coordination across tiers of government: Aligning federal and state tax agencies will require sustained political will.
Final Thoughts — What This Means for You
Nigeria’s 2026 Tax Reform marks the beginning of a new era—one that promises greater simplicity, fairness, and efficiency across the tax system. However, with these opportunities also come new rules, new obligations, and real consequences for getting it wrong. For both individuals and businesses, the difference between being compliant and being exposed will largely come down to how well you understand and prepare for these changes ahead of 2026.
At Prioclen Consulting, we believe that clarity is the first step to compliance. Tax reforms should not be navigated with guesswork or assumptions. Ignorance or delayed action under the new regime could directly affect your income, your business operations, and your long-term financial stability.
We support individuals and businesses through:
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Tax Compliance & Filing – CIT, PIT, VAT, WHT, CGT, Stamp Duties, PAYE, and statutory levies
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Tax Advisory & Planning – Health checks, restructuring, incentives, and optimization
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Tax Audit & Investigation Support – Pre-audit reviews, representation, and dispute resolution
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Indirect & International Tax Services – VAT, customs, transfer pricing, and cross-border structuring
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Tax Technology & Training – Automation, e-filing setup, and capacity building
Book a Free Tax Clarity Session
If you are unsure how the 2026 Tax Reform will affect your salary, your business, or your compliance obligations, we invite you to book a FREE Tax Clarity Session with our experts.
This session will help you:
✔ Understand how the new rules apply specifically to you
✔ Identify potential risks and opportunities early
✔ Know exactly what steps to take before January 2026
👉 Book your free Tax Clarity Session today and take control of your tax position—before the reforms take effect.