Tinubu’s Tax Overhaul: Food, Education, and Agriculture Get VAT-Free Relief

• The Federal Inland Revenue Service (FIRS) has said that food, education and the agriculture sectors are now exempted from Value Added Tax (VAT)
• The FIR boss, Zacch Adedeji, disclosed that the move was designed to ease the burden on citizens and businesses while boosting government revenue
• He stated that the new tax laws have received positive feedback from stakeholders who call it revolutionary

Pascal Oparada, a reporter for Legit.ng, has over ten years of experience covering technology, energy, stocks, investment, and the economy.

Nigeria’s tax system is undergoing its biggest transformation since independence, with the Federal Government exempting food, education, shared transport, and agriculture from value-added tax (VAT).

The landmark reforms, designed to ease the burden on citizens and businesses while boosting government revenue, were announced by Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS).

A simplified tax code for Nigerians

Speaking during an interview marking his second year in office, Adedeji credited President Bola Tinubu with fulfilling his campaign promise to simplify tax compliance and support business growth.

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The new consolidated tax code, scheduled to take effect in January, merges multiple tax laws into a single framework.

It reduces the number of tax types to single digits, simplifies filing, and introduces sweeping reliefs for small businesses and low-income earners.

Under the code, businesses with annual turnover below ₦50 million will no longer pay tax, while personal income tax thresholds have been adjusted to shield vulnerable households.

This, according to Adedeji, will make compliance easier and expand the tax base without stifling growth.

Four landmark acts signed into law

President Tinubu signed four key bills into law—the Nigeria Tax Act on June 26, this year, such as Nigeria Tax Administration Act, the Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act.

Collectively known as the “Tax Acts quartet,” these laws broaden the tax base, strengthen compliance, and boost transparency across all tiers of government.

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The reforms have been shaped by the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele of PwC, and composed of experts from both public and private sectors.

Early results: Revenue rising and debts falling

Nigeria’s tax-to-GDP ratio has already improved from 10 per cent to 13.5% within two years, with a target of 18% by 2027.

In August, the federation account disbursed a record ₦2 trillion, nearly 70% of which came from taxes.

Adedeji disclosed that 30 states have repaid ₦1.85 trillion in debts over the past 18 months, while debt servicing costs have fallen sharply from 90% of government revenue to about 50%.

He added that external reserves are also growing on the back of improved fiscal stability.

FIRS becomes Nigeria Revenue Service

As part of the changes, the FIRS will have a new name, the Nigeria Revenue Service, to align its role in collecting taxes for all tiers of government.

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“The word ‘federal’ gave the wrong impression that we only collect for the federal government, whereas 90 per cent of VAT belongs to the states,” Adedeji explained.

The rebranded agency will also restructure operations by grouping taxpayers into small, medium, and large categories, with one-stop shops for filing and payments.

“We are service providers to taxpayers rather than just an enforcement agency,” Adedeji stressed.

Balancing short-term pain with long-term gains

Adedeji admitted the reforms have caused short-term hardship, likening them to “the pain of a woman in labour.”

But he highlighted interventions such as compressed natural gas buses and crude-for-naira support for refiners, which he said are already easing the pressure on fuel prices.

On concerns over a proposed petrol surcharge, he clarified that it would only apply if activated by a ministerial order and gazetted officially.

Urging Nigerians to embrace the changes, he concluded: “When companies are expanding and making profits, we will all benefit.

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Our task is to remove hurdles in their way, and that is what the president has done with these reforms.”

Nigerians to pay no VAT on pads, diesel, others

Legit.ng earlier reported that President Bola Tinubu has signed a sweeping tax reform into law, exempting several items from the 7.5% value-added tax (VAT).

The Nigeria Tax Act, part of four major fiscal bills signed on June 26, 2025, is designed to reduce the cost burden on citizens and stimulate growth in strategic sectors.

The law is expected to take effect on January 1, 2026, and will be implemented by the newly established Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service.

Source: Legit.ng