New Tax Laws: List of 10 Ways that States in Nigeria Will Benefit from the Reform
- Nigeria’s proposed tax reform bills have stirred debate as they promise to reshape fiscal federalism
- Lawmakers said the measures were designed to give states more financial autonomy and expand their revenue base
- Analysts noted that the reforms could transform governance, infrastructure, and public services across the country
Tax reform has taken centre stage in Nigeria’s fiscal policy debates, with proposed bills promising to reshape how revenue is shared between the federal and state governments.
According to Tribune Online, the reforms, described as a step toward strengthening fiscal federalism, were designed to give states more financial autonomy and resources.
Source: Twitter
By redistributing tax revenues, modernising outdated laws, and fostering fairer tax administration, the bills were expected to unlock growth opportunities for subnational governments.
Lawmakers, policymakers, and stakeholders have debated the proposals intensely, as they attempt to balance federal interests with state-level empowerment.
Below are 10 ways the tax reform bills were reported to enrich states, highlighting how these changes could transform governance, infrastructure, and public services across Nigeria.
1. VAT revenue allocation to states
The Federal Government was set to allocate 5 percent of its existing 15 percent share of Value-Added Tax (VAT) revenue to the states. This redistribution was seen as a direct boost to state coffers.
2. Electronic Money transfer levy for states
The bills redirected revenue from the Electronic Money Transfer levy exclusively to states, categorising it as part of stamp duties. Analysts said this measure would provide states with a new stream of income.
3. Abolition of outdated stamp duty laws
The reforms aimed to abolish outdated stamp duty laws and introduce a streamlined version. Observers noted that this change would modernise tax collection and increase revenue generation for states.
4. Tax collection from Limited Liability Partnerships
Under the new framework, states were granted authority to collect taxes from Limited Liability Partnerships. This expansion of tax jurisdiction was expected to widen the revenue base.
5. Tax exemption on state bonds
When passed by the National Assembly, the bills would enable state governments to enjoy tax exemption on their bonds, placing them at par with federal government bonds. Economists argued that this would encourage more investment in state bonds.
6. Equitable VAT distribution model
The proposed tax reform introduced a more equitable model for VAT attribution and distribution. This adjustment was projected to lead to higher VAT income for states.
7. Integrated tax administration for states
Integrated tax administration was designed to provide tax intelligence to states, strengthen capacity development, and expand collaboration. The scope of the Tax Appeal Tribunal was also extended to cover taxpayer disputes on state taxes.
8. Powers of the Accountant-General of the Federation
The bills granted powers for the Accountant-General of the Federation to deduct taxes unremitted by a government or Ministries, Departments and Agencies. These funds would then be paid directly to the beneficiary sub-national government on personal income tax of workers of federal institutions in states.
9. Autonomy for states’ internal revenue service
The reforms served as a framework to grant autonomy to states’ internal revenue service. They also enhanced the Joint Revenue Board to promote collaborative fiscal federalism.
10. Legal framework for lottery and gaming taxation
The bills introduced a legal framework for taxation of lottery and gaming, alongside the introduction of withholding tax for the benefit of states. This measure was expected to tap into a growing sector and provide additional revenue.
Source: Twitter
4 categories of Nigerians exempted from paying tax
Legit.ng earlier reported that Nigeria’s Fiscal Reforms announced that from January 1, 2026, new tax laws would come into effect, offering relief and exemptions to low-income earners, average taxpayers, and small businesses. Officials said the changes were designed to ease the financial burden on citizens and encourage compliance with tax regulations.
Under the revised Personal Income Tax (PAYE) rules, four categories of Nigerians were identified as exempt from paying tax. Authorities explained that the reforms were aimed at protecting vulnerable groups while ensuring fairness in the tax system. Officials noted that the exemptions would particularly benefit workers on minimum wage and small-scale earners.
Source: Legit.ng
