Tinubu’s Tax Reforms Unveiled: How New Laws Will Shape Nigeria’s Economy From 2026

According to Ireporter Online, the Federal Government has provided fresh clarity on Nigeria’s sweeping tax reforms set to take effect from January 2026, insisting that the new framework is designed to strengthen economic competitiveness rather than discourage investment. The explanation was given by the Special Adviser to President Bola Ahmed Tinubu on Economic Affairs, Tope Fasua, who dismissed fears that the reforms could trigger capital flight or weaken the business climate.

Fasua stated that the 2025 tax reforms, driven by the Nigeria Tax Act and the Nigeria Tax Administration Act, represent one of the most investor-friendly and modern fiscal transformations in decades. He explained that the reforms are targeted at simplifying the tax structure, reducing compliance burdens, aligning Nigeria with global best practices, and protecting businesses and individuals from outdated tax rules. He added that the new system is progressive and in line with the administration’s goal of improving the standard of living of Nigerians.

One of the key changes is the introduction of the 4 per cent Development Levy, which replaces several fragmented earmarked taxes such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and the Police Trust Fund Levy. Fasua clarified that the levy is not a new tax but a consolidation of multiple deductions which, when combined under the old system, often exceeded 4 per cent, especially for companies in the technology, telecommunications and financial sectors. He further noted that small businesses with a turnover of N100 million and below, as well as non-resident companies, are exempt from the levy.

The consolidation, he said, brings predictability, reduces the cost of compliance and lowers the overall cost of doing business. Unlike the previous regime where agency-specific levies caused uncertainty, the new system creates a unified pool for funding education, security, defence, technology and cybersecurity, signaling an end to uncoordinated tax collections.

On Free Trade Zones, Fasua countered claims that their incentives had been weakened. He explained that while their tax-exempt status remains intact, a 25 per cent threshold has been introduced for domestic sales. Under the new arrangement, Free Trade Zone companies can sell up to 25 per cent of their output locally during a three-year transition period from 2026 to 2028 and still enjoy tax exemptions. However, after 2028, domestic sales will attract taxes to prevent unfair competition with local businesses, a system similar to those used in countries like the UAE, Malaysia and Mauritius.

Addressing concerns over the new 15 per cent minimum tax rate, Fasua explained that the policy is part of a global OECD/G20 agreement involving over 140 countries and applies only to multinational firms with a global turnover of €750 million or more. He said the measure is intended to protect Nigeria’s tax base by ensuring that taxes due on multinational profits are collected locally rather than ceded to foreign governments. The same minimum tax standard has also been extended to large domestic companies with annual turnover of N50 billion and above to ensure fairness and prevent aggressive tax avoidance.

Fasua also touched on the overhaul of the capital gains tax framework, now renamed “chargeable gains” under the new law. The outdated 1967 Capital Gains Tax Act, which imposed a flat 10 per cent tax, has been replaced with a more flexible system that integrates gains into company profits or personal income. He noted that although headline tax rates may appear higher, the new regime introduces significant exemptions and reliefs, including a reinvestment provision that allows investors to roll over proceeds from the sale of shares into new investments within the same year without tax liability.

He added that the reforms improve how losses are treated, allowing failed investments to reduce taxable income and encouraging risk-taking, innovation, and venture capital activity. Specific monetary thresholds were also introduced to exempt small investors and startups, as gains below defined limits will not attract tax, thereby protecting retail investors and deepening capital market activity.

In conclusion, the government maintained that the reforms are not about increasing tax pressure but about building a predictable, transparent, and globally competitive tax system. The administration said the new laws close loopholes, preserve critical incentives, protect investors, and lay the foundation for long-term economic stability. According to Fasua, Nigeria’s message to the global investment community is clear: the country remains open for business under a modern, fair, and growth-oriented tax regime.