Nigeria’s New Tax Reforms Explained: What Business Owners Need to Know Before 2026

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On June 26, 2025, President Bola Tinubu signed four new tax laws that aim to make paying taxes in Nigeria easier, fairer, and more transparent. These laws will take effect from January 1, 2026, giving everyone six months to get ready.

The bills affect anyone who earns a salary, runs a business, or buys anything in Nigeria. So if you're a business owner, entrepreneur, finance lead or even freelancer, this matters to you as how you track and report your money may now change.

In this blog, we explain what’s changing, who it affects, and how to prepare.

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The 4 New Tax Laws at a Glance

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Here are the four new laws and what they mean in everyday terms.

1. Nigeria Tax Act (Ease of Doing Business)

This law combines more than 50 different taxes into one simplified tax code.

• Before: You might have been paying different taxes with confusing names, some from the federal government, some from your state, and others from your local government.
• Now: These taxes will be removed or merged into one, making it easier to know what you owe, and to whom.

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2. Tax Administration Act

This law sets uniform rules for how taxes are collected across the country.

• No more confusion between how Lagos State collects tax vs how Kano State does it.
• It also promotes digital processes instead of paperwork.

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3. Nigeria Revenue Service Act

This law replaces the old FIRS with a new, independent agency called the Nigeria Revenue Service (NRS).

• The NRS will be faster and results-driven.
• They’ll rely on data and automation.

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4. Joint Revenue Board Act

This law improves cooperation between federal and state tax bodies.

• It also sets up a Tax Ombudsman and Tax Appeal Tribunal, meaning if you’re wrongly taxed, there’s a proper channel to resolve it.

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What Business Owners Need to Know

Here are the key updates and what they mean for you.

1. Tax Relief for Businesses

• No Company Income Tax for Businesses Earning ₦50M or Less: Previously, this threshold was ₦25M. If your business's annual turnover is ₦50 million or less, you are now exempt from paying company income tax. This is a powerful incentive for growth, allowing businesses to reinvest more of their profits back into operations.
• Reduced Company Income Tax (CIT) for Larger Businesses: For companies that exceed the ₦50M threshold, the company income tax rate has been reduced from 30% to 25%. This offers considerable savings for larger enterprises.

Implication for Business Owners: Review your business structure and annual turnover. If you fall within the ₦50M exemption, that's significant capital freed up! For larger businesses, the 5% reduction in CIT will positively impact your bottom line.

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2. Tax Relief for Employees 

• Tax-Free Termination Packages: In a move that offers considerable support during job transitions, the first ₦50 million of any termination package received is now tax-free.
• More Generous PAYE Tax Relief: If you earn ₦1 million/year (₦83,000/month) or less, you will no longer pay any PAYE (Pay As You Earn) tax. Even if you earn up to ₦1.7 million/month or less, your PAYE will be lower due to new, more generous tax reliefs.

Implication for Individuals & Employers: As an individual, this means more take-home pay for many. For employers, understanding these PAYE changes is crucial for accurate payroll management and communicating benefits to employees.

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3. Tax Compliance for International Remote Workers

• Defining Remote Income Taxation: The new laws properly define how remote income is taxed, especially for freelancers, consultants, and employees working from Nigeria for companies abroad. This provides much-needed clarity for the booming gig economy and remote work sector. So, a remote employee for a company outside Nigeria must now:
  
  1. Register with the state tax authority.
  2. Declare income in Naira equivalent.
  3. Pay personal income tax based on applicable rates.
• Increased Information Exchange: Nigeria is a participating jurisdiction in the OECD's Common Reporting Standard (CRS) and other bilateral information exchange treaties.
  
  • What this means: If your employer is in a compliant country, your tax information can be shared with Nigerian authorities.
  • CBN Data Sharing: If you receive regular inflows in USD, GBP, EUR, or NGN from platforms like Payoneer, Wise, or foreign employers, these transactions go through Nigerian banks or fintechs. The Central Bank of Nigeria (CBN) shares data with tax authorities through BVN-linked accounts and Transaction Monitoring Systems.

Implication for Remote Workers: Transparency is key. Ensure you are declaring all income accurately, regardless of its source, and understand your obligations as a remote worker or a business engaging remote talent. The days of opaque cross-border transactions are rapidly fading.

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4. Zero VAT on Essentials

• There's now zero VAT (Value Added Tax) on essential items like food, healthcare, education, electricity, and baby products. This means if you buy groceries or basic food items at a supermarket, you shouldn't see VAT on your receipt.

Implication for Businesses & Consumers: This eases the burden on consumers and potentially stimulates demand for these essential goods and services. For businesses operating in these sectors, it simplifies pricing and can remove a point of friction for customers.

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What Should You Do Now?

1. Start reviewing your financial records
Ensure all expense data is accurate, up to date, and easy to retrieve.

2. Centralise your tax documentation
Use Flex Finance to store and access receipts, invoices, and approvals in one place.

3. Automate spend tracking
With Flex, every expense, from petty cash to large transfers, is categorised and auditable, helping you stay compliant ahead of the new tax regime.

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How Flex Finance Helps You Stay Compliant with the New Tax System

The tax reform is an opportunity for Nigerian businesses to build better financial discipline. The new laws reward transparency and digital compliance, exactly what Flex Finance was built for.

Flex makes it easy to get your business finances in shape for the new tax system:

• Track all your expenses with digital proof in one dashboard
• Maintain clean, centralised records of all financial activity
• Store receipts digitally, no more lost paperwork
• Tag transactions to make reporting simple
• See your tax-relevant spend in real time
• Generate real-time reports for auditors and tax authorities
• Export audit-ready reports for tax filing

Flex Finance helps Nigerian businesses stay organised, compliant, and confident.

📌 Want to be audit-ready before January 2026?
Sign Up on Flex Finance.

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Frequently Asked Questions

When do the new tax laws actually take effect?
The new tax laws officially begin on January 1, 2026.

How do these new tax reforms affect how I manage my business finances?
You’ll need to be more organised. Under the new laws, digital records and clear financial reporting are more important than ever. You should start tracking every expense, saving receipts digitally, categorising your spend. Flex Finance helps you do all of this automatically, so you stay compliant and audit-ready.

What is the Nigeria Revenue Service (NRS), and how is it different from FIRS?
The NRS replaces the Federal Inland Revenue Service (FIRS). It is designed to be more independent, technology-driven, and focused on results. It’s expected to reduce manual processes, cut out inefficiencies, and make tax filing easier and more transparent for individuals and businesses.

Do I still need to pay Company Income Tax if my business earns less than ₦50 million per year?
No, you don’t. If your business makes ₦50 million or less in total revenue within a year, you are now exempt from paying Company Income Tax under the new laws.

 What types of products are now exempt from VAT (Value Added Tax)?
Essential items like food, rent, electricity, baby products, school fees, and healthcare services no longer attract VAT. So, for example, if you buy rice at the supermarket or pay your child’s school fees, you shouldn’t be charged VAT anymore.

I’m a freelancer. Do these new laws apply to me?
Yes. Freelancers, consultants, and gig workers, whether local or working for foreign clients, are included. If you earn income from services, you must now declare your income, pay personal income tax, and register with your local tax office.

 What happens if my business is wrongly taxed or overcharged by a tax officer?
The new reforms introduced a Tax Ombudsman and Tax Appeal Tribunal, which means you now have an official way to challenge unfair tax treatment. Instead of arguing with individual tax officials, you can file a formal complaint and get a fair hearing.

How can Flex Finance help my business prepare before 2026?
Flex Finance helps you:

• Organise your expense data
  
  
• Digitally store receipts
  
  
• Track and categorise transactions automatically
  
  
• Generate audit-ready reports

This means less stress and more confidence when the new tax rules kick in.

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