By Yunus Olawale
Nigeria’s long-anticipated tax reset moved from policy papers to public consciousness as The Companion Abuja District convened its 2025 Quarterly Webinar on “The Implication of New Tax Acts 2025 on Individuals and Businesses in Nigeria.” The high-level forum functioned less like an academic exercise and more like a strategic alignment session—bringing policymakers, practitioners, and the public into the same room to decode what has changed, why it changed, and how it will reshape economic behavior from January 1, 2026.
Opening the session, Dr. Imran Saheed Adekunle, FCA, ACIT, Convener of the webinar and Ameer of The Companion Abuja District, set the tone with a reminder attributed to Albert Einstein: “The hardest thing in the world to understand is income tax.” The webinar, he said, was designed to de-risk confusion, counter misinformation—particularly from unregulated social media commentary—and restore confidence in the new tax architecture.
Welcoming participants from across Nigeria and multiple professional sectors, Dr. Adekunle framed taxation as a social contract, not a one-way debit. Taxes, he argued, must translate into tangible public value—electricity, roads, hospitals, schools, security, and the protection of taxpayer rights—otherwise compliance becomes a moral and economic uphill climb. Drawing from Islamic principles, he likened the intent of taxation to Zakat: elevating the vulnerable, not punishing productivity.
*Tax as the Engine, Not the Anchor*
Delivering the keynote, Dr. Asheikh Maidugu, retired Director of the Federal Inland Revenue Service, cut straight to the macroeconomics. Taxation, he said, remains the most sustainable source of national development finance—globally preferred over debt. Nigeria’s infrastructure deficits across energy, health, education, and security cannot be closed on borrowing alone.
He contextualized the urgency with hard numbers: Nigeria’s federal budget has ballooned from ₦10.59 trillion in 2020 to a projected ₦58 trillion by 2026. That growth trajectory, he argued, makes a smarter, fairer, and more efficient revenue system non-negotiable. Addressing public anxiety, he acknowledged concerns about whether National Assembly provisions fully align with what was gazetted—underscoring that clarity and trust are now strategic imperatives, not optional extras.
For Dr. Maidugu, reform is not a cosmetic patch. It is a system-wide recalibration: rewriting obsolete laws, broadening the tax base without taxing poverty, tightening administration, digitizing compliance, and reducing leakages. He urged Nigerians—particularly Muslims—to view compliant taxation as civic participation in nation-building.
*What the 2025 Tax Acts Actually Change*
On substance, the reforms redraw the fiscal map for both individuals and businesses.
For individuals, the new regime recalibrates equity. Annual income up to ₦800,000 is tax-free, and after statutory reliefs, those earning roughly ₦1.2–₦1.3 million pay no personal income tax. A progressive structure caps the top marginal rate at 25 percent. Rent relief allows 20 percent or up to ₦500,000, whichever is lower. The national minimum wage of ₦70,000 monthly—and wage awards up to ₦100,000—remain exempt.
At the same time, the net is wider and smarter. Residents are taxed on worldwide income. Digital earnings and crypto assets are now within scope. Tax Identification Numbers are mandatorily linked with NIN, BVN, and other identifiers—closing historic compliance gaps.
For businesses, the reforms draw a deliberate line between nurturing growth and taxing scale. Small companies—defined as turnover below ₦100 million and assets under ₦250 million—are exempt from company income tax, capital gains tax, and development levies. Larger firms face a 30 percent corporate tax rate, while multinational enterprises are subject to a 15 percent global minimum effective tax. Capital gains tax rises from 10 to 30 percent, harmonized with income tax, while minimum tax is abolished to ease pressure during downturns. Mandatory electronic invoicing and real-time reporting push transparency from policy intent to operational reality.
On consumption taxes, stability meets strategy. VAT remains at 7.5 percent. Small businesses below the ₦100 million threshold are relieved of VAT collection obligations. About 70 percent of daily-need items are VAT-exempt or zero-rated. Critically, unrestricted input VAT claims—now including fixed assets and services—signal a more investment-friendly posture.
*Architecture, Not Isolated Clauses*
Adding strategic clarity, Olufemi Michael Olarinde, Head of Fiscal and Tax Reform Implementation at FIRS and Special Adviser on Tax Policy, cautioned against cherry-picking clauses without context. Using a cultural analogy, he urged stakeholders to read the reform as a complete system.
He outlined its guiding principles: simplicity, harmonization, taxpayer focus, digitization, data-driven decision-making, competitiveness, and tax neutrality. Structurally, Nigeria’s framework is consolidated into four core instruments: the Nigerian Tax Act 2025; the Nigerian Tax Administration Act 2025; the Nigerian Revenue Service Establishment Act 2025—transitioning FIRS to the NRS; and a strengthened Joint Revenue Board Establishment Act with an empowered Tax Appeal Tribunal.
The philosophy, he said, is straightforward: tax prosperity, not poverty; tax the fruit, not the seed.
*The Social Contract Question*
Beyond rates and thresholds, the webinar confronted the elephant in the room: trust. Dr. Adekunle posed pointed questions to participants—do taxpayers have a real say in how revenues are spent? Do they have enforceable rights to challenge misuse? Without transparency and accountability, speakers agreed, even the best-designed tax system will struggle to gain legitimacy.
Participants acknowledged challenges ahead: awareness gaps, resistance to change, enforcement capacity, and lingering skepticism. The consensus was clear—sustained public education and credible governance will determine whether the reform succeeds.
*Bottom Line*
Nigeria’s 2025 tax reforms mark a decisive pivot from a fragmented, opaque system to a coherent, digitally enabled framework built around fairness, growth, and compliance. The message from the Companion Abuja District webinar was unambiguous: earn less, pay less; invest more, grow more; play by clearer rules in a system designed to fund Nigeria’s future. The spreadsheet has been redesigned. Execution, now, is the only thing that matters.
*Yunus, Olawale,
Public Affairs Secretary
The Companion, Abuja District.