9 key Tax Changes explained as Nigeria Revenue Service Replaces FIRS

• President Bola Tinubu recently signed four key tax reform bills into law, including the Nigeria Tax Bill and the Nigeria Revenue Service (NRS) Bill
• These new laws aim to modernise the tax system, offering relief such as income tax exemptions for workers earning N800,000 or less and small business owners
• Additionally, essential items like food and medical services are exempt from VAT, and a new Development Levy will fund national institutions

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

President Bola Tinubu has recently signed the most talked-about tax reform bills into law. The signing ceremony took place at the presidential villa on Thursday, June 26.

The four bills, which have now been signed into law, are the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.

This move follows months of policy work, reviews, and consultations aimed at modernising a tax system long criticised as complex, unfair, and burdensome for small businesses.

9 ways the new tax laws affect Nigerians

Highlighting the breakdown of the law, Bashir Ahmad explained 9 ways it affects Nigerians:

1. FIRS Renamed to NRS: The Federal Inland Revenue Service (FIRS) is now called the Nigeria Revenue Service (NRS).
2. Unified Revenue Collection: The NRS will now handle revenue collections previously managed by agencies like the Nigeria Customs Service, NUPRC, NPA, and NIMASA.
3. Low-Income Relief: Workers earning N800,000 or less annually will now be exempt from income tax.
4. High-Income Tax: A 25% personal income tax will apply only to individuals earning more than N50 million annually.
5. Small Business Exemption: Small business owners are fully exempt from paying income tax.
6. Corporate Tax Cut: Starting in 2026, company income tax for medium and large firms will be reduced from 30% to 25%.
7. VAT Exemptions on Essentials: Essential items like food, medical services, pharmaceuticals, school fees, and electricity are exempt from VAT.
8. No Tax Hike: VAT remains at 7.5%, and corporate income tax remains at 30%—there has been no increase.
9. New Development Levy: A 2%–4% Development Levy will be used to fund critical national institutions such as NELFUND, TETFund, NITDA, and NASENI.

FG takes action to increase revenue

Legit.ng reported that Nine months ago, President Bola Tinubu presented the four tax reform bills to the National Assembly for consideration.

The bills include the Nigeria Tax Bill (Ease of Doing Business), the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.

The bills were structured to completely revamp Nigeria’s tax system, replacing the current practice that has been in place since the military administrations.

Source: Legit.ng