New Tax Laws To Ease Burden on Workers, SMEs – Oyedele 

The Federal Government has said its ongoing tax reforms are designed to place Nigerians at the centre of fiscal policy, stimulate investment and create a fairer, more efficient tax system capable of supporting long-term economic growth.

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, stated this at a one-day workshop organised by the Federal Inland Revenue Service (FIRS) for journalists in Lagos.

Oyedele disclosed that a key component of the reform package is the reduction of the Corporate Income Tax (CIT) rate from 30 per cent to 25 per cent, a move projected to cost the Federal Government about N1.4 trillion in revenue in 2026. He, however, stressed that the revenue sacrifice is strategic, as it is expected to attract investment, boost business expansion and strengthen the productive base of the economy.

According to him, the reforms prioritise workers’ welfare by lowering the overall tax burden, eliminating multiple taxation and ensuring that low and middle-income earners retain more of their disposable income.

He explained that exemptions on essential goods and services have been expanded to protect vulnerable households and drive consumption-led growth. Items exempted from Value Added Tax (VAT) include basic food, education, healthcare, shared road transport and rent.

“Minimum wage earners are fully exempt from personal income tax. Small businesses enjoy broader exemptions, while VAT no longer applies to essentials such as basic food items, education, healthcare, shared transport and rent,” Oyedele said.

He noted that Small and Medium Enterprises (SMEs) stand to gain significantly from the reforms, as simplified compliance processes and a streamlined tax structure will reduce operational costs and encourage more informal businesses to formalise.

Describing small businesses as the backbone of the Nigerian economy, Oyedele said qualifying small firms will enjoy a zero per cent corporate income tax rate, exemption from VAT and Withholding Tax (WHT), as well as Pay As You Earn (PAYE) exemptions for their typically low-income employees.

He added that improved access to finance, increased capital flows and the removal of bureaucratic bottlenecks would create a more supportive environment for SMEs to scale operations, generate employment and contribute meaningfully to national growth.

The committee chairman said the reforms are aimed at correcting long-standing economic distortions that placed disproportionate pressure on lower-income groups and smaller businesses, while advancing progressivity within the tax system to ensure a fairer distribution of tax responsibilities.

Oyedele also said investors will benefit from the new framework. Withholding tax on bonus shares has been eliminated, capital gains tax exemption thresholds raised, and reinvestment exemptions introduced alongside deductions for capital losses.

In addition, state government bonds are now tax-exempt, joining federal government bonds, a development welcomed by subnational governments. Withholding tax on fixed-income investments is now treated as final tax for individuals and non-residents, while small investors will enjoy lower effective tax rates on capital gains.

By way of illustration, Oyedele noted that an investor selling shares worth N120 million with a gain of N8 million would now be exempt from capital gains tax, a change expected to encourage domestic savings and investment.

He also revealed that businesses can now settle taxes related to foreign currency transactions in naira, a measure aimed at easing pressure on the foreign exchange market.

On administration, Oyedele said the government is strengthening compliance frameworks through enhanced digital systems, clearer tax definitions and more transparent processes to combat tax evasion and avoidance. He added that the move toward a harmonised tax system with fewer, better-defined taxes would reduce duplication, lower compliance costs and rebuild trust between taxpayers and authorities.

Framing the reforms as more than technical adjustments, Oyedele described them as a fundamental reset of Nigeria’s tax system, which has long been criticised for complexity, inequity and arbitrary assessments.

“The new tax laws are pro-masses. They are designed to protect low-income earners, reduce the cost of living and ensure that those with greater capacity contribute more,” he said.

Under the new progressive structure, a zero per cent income tax band has been introduced, benefits in kind are capped, rent reliefs expanded and effective tax rates reduced for middle-income earners, while high-income earners will face a higher top marginal rate.

Oyedele expressed confidence that the reforms would create a more predictable fiscal environment, attract investment, drive business growth and enable the government to mobilise resources more efficiently for national development.