NESG Endorses 2025 Nigerian Tax Reform Acts to Simplify Tax System

Strategic Insights -

The Nigerian Economic Summit Group (NESG) has backed the '2025 Nigerian Tax Reform Acts', which aim to simplify the tax system and bring several benefits. The NESG, in its recent publication titled 'The 2025 Nigerian Tax Reform Acts: Taxing the Fruits, Not the Seed', outlined the objectives of the new tax laws. The NESG stated that these laws, among others, aim to increase domestic revenue mobilization, broaden the tax base, protect vulnerable groups, and improve tax collection and accountability.

Key Takeaways:

  • The 2025 Nigerian Tax Reform Acts aim to increase Nigeria's tax-to-GDP ratio to 18 per cent within five years, reducing reliance on oil revenue and debt financing.
  • The tax laws seek to simplify and harmonize the tax system by merging fragmented tax laws into a coherent framework and making compliance easy for individuals and businesses.
  • The Nigeria Revenue Service (NRS) will be established to collect and account for all revenues accruing to the federation.
  • The digitalisation of all aspects of tax administration aims to improve efficiency and curb leakages, enhance transparency, and increase taxpayer confidence.
  • The tax laws promote fairness and equity by exempting essentials like food and medicine from VAT, and simplify compliance for micro and small businesses earning under N50 million annually.
  • The tax laws strengthen intergovernmental coordination by setting up a Joint Revenue Board to align Federal, State, and Local tax policies, and revise revenue-sharing mechanisms to reward productivity while preserving equity.
  • The tax laws support economic competitiveness and growth, and lower compliance costs to attract investment.

Statistics:

  • 18 per cent: The target tax-to-GDP ratio to be achieved within five years.
  • 5 years: The timeframe for increasing the tax-to-GDP ratio to 18 per cent.
  • N50 million: Annual earnings threshold for micro and small businesses to simplify tax compliance.
  • FEC: The Federal Executive Council that approved the establishment of the Nigeria Revenue Service (NRS).

Sources:

  • 'The 2025 Nigerian Tax Reform Acts: Taxing the Fruits, Not the Seed', Nigerian Economic Summit Group (NESG)