Nigeria's biggest tax overhaul in decades took effect on 1 January 2026. The reform was signed into law in June 2025 and brings together several older tax statutes under a smaller set of new laws. If you run a business, the changes touch how you register, file, pay and keep records.
The new framework in brief
The package is usually described as four laws: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025 and the Joint Revenue Board Act. The Nigeria Tax Act sets out what is taxed and at what rate. The Administration Act covers filing, compliance and enforcement.
The Nigeria Revenue Service (NRS) has replaced the Federal Inland Revenue Service (FIRS) as the federal collection agency. VAT, company income tax and the federal side of withholding tax and PAYE now sit with the NRS.
What changed for companies
- Company income tax. Companies that are not classed as small continue to pay 30% on taxable profits.
- Development Levy. A single 4% levy on assessable profits replaces several older levies, including the Tertiary Education Tax and the IT levy. Small companies are outside it.
- Small companies. Companies that meet the small-company definition, which combines a turnover limit and a fixed-asset limit, are exempt from company income tax. Published summaries quote different turnover figures, so confirm the current threshold for your business before relying on it.
- VAT. The rate stays at 7.5%. A planned increase did not go ahead, and essentials such as basic food, education materials and healthcare services remain relieved.
What to check in your business now
- Confirm whether your company qualifies as a small company, and keep the records that prove it.
- Review your tax computation templates. Levies you used to calculate separately may now fall under the Development Levy.
- Check your VAT position, especially if your turnover is close to the registration threshold.
- Update payroll for the new PAYE structure (see our separate article on PAYE in 2026).
- Make sure your bookkeeping can support monthly or quarterly reviews rather than a once-a-year scramble.
Tax law is detailed, and your own facts matter. If you are unsure how the new rules apply to your company, a short review with a tax professional can save you from both overpaying and penalties.
This article is general information, not tax, legal or financial advice. Rules change and every business is different, so speak to a qualified professional about your situation.
