New Tax Regime: LIRS Discloses Those Who Will Pay Most Tax in Lagos
- Analysis of over 1.49 million tax records shows that more than half of taxpayers will pay zero tax
- The new tax law exempts low-income earners and protects minimum wage workers from taxation
- Companies have been urged to file their tax returns before the January 31 deadline
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
The Lagos State Internal Revenue Service (LIRS) has said that only a small fraction of taxpayers in the state will pay more tax under Nigeria’s newly introduced tax regime, while the vast majority of workers are expected to pay less or nothing at all.
Source: Getty Images
According to the agency, an analysis of 1,494,491 anonymised tax records from the 2024 tax year showed that just 1.6% of Lagos taxpayers will face higher tax obligations under the new laws.
In contrast, about 98% of workers will either see a reduction in what they pay or be completely exempt, Leadership Newspaper reported.
Over 50% of tax payers totally exempt
Speaking during a media briefing at the LIRS headquarters in Ikeja, the Special Adviser to the Executive Chairman, Tokunbo Akande, said the recalculated data revealed that 54.54% of taxpayers would pay zero tax, while 43.9% would pay less than they did under the previous tax framework.
Akande described the new tax regime as Nigeria’s most significant fiscal reform since independence, noting that it was designed to support business growth, enhance purchasing power and encourage better financial discipline across the economy.
He explained that the framework prioritises low-income earners, small businesses and the middle class, while remaining neutral for high-income earners. According to him, the law is structured to protect vulnerable individuals and enterprises without discouraging large-scale business activities.
Akande added that resistance to the reforms had largely come from groups that stand to benefit from the changes, including organised labour. He said a closer review of the provisions shows that the new tax laws strongly favour workers.
He further noted that individuals earning N800,000 or less annually are exempt from tax under the new framework, while those earning the national minimum wage or below will remain tax-free, even if the minimum wage is reviewed upward.
Source: Getty Images
Tax reforms to promote fairness
On capital gains tax, Akande said the reforms aim to promote fairness by aligning taxes on speculative income with those on productive investments. He explained that under the old system, gains from selling shares or property were taxed at 10%, even when they matched profits earned by factories and other productive businesses that paid higher taxes.
Under the new law, he said capital gains will now be taxed at the same rate as personal or corporate income, depending on the nature of the earnings.
Akande also advised companies to submit their annual tax returns for the previous year ahead of the January 31 deadline, warning that last-minute filings could put pressure on the electronic filing platform.
LIRS warns against fictitious transactions
Legit.ng earlier reported that the LIRS warned individuals and businesses against engaging in artificial or fictitious transactions aimed at reducing tax obligations.
LIRS explained that under Section 46 of the NTAA 2025, any transaction considered artificial or fictitious, especially where it results in reduced tax liability, may be ignored or adjusted by the relevant tax authority.
The agency added that transactions between connected persons, such as related companies or individuals, will also be treated as artificial if they are not conducted at arm’s length, meaning on terms that independent parties would normally agree to.
Source: Legit.ng
