At its core, Nigeria’s tax reform aims for the government to collect higher revenue without making it harder for businesses to survive, invest, and create jobs. The challenge now is to ensure that this proposition does not remain trapped in legislation.
Businesses cannot continue to face the old reality of multiple taxes, levies, permits and charges, while tax reforms constitute a key plank of the government’s economic strategy.
The four tax reform laws – the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act – that took effect in January were designed to tackle this problem.
Unfortunately, the pain persists.
The NTA raised the threshold for small-company exemption from N25 million to N100 million in annual turnover. These businesses are also exempted from Capital Gains Tax and the new Development Levy.
The reforms further consolidate several earmarked corporate levies into a single 4.0 per cent Development Levy for companies that are liable to pay it. The corporate tax rate is intended to fall from 30 per cent to 25 per cent, while broader input-VAT credits should reduce the tax embedded in business costs.
These significant reforms reflect the philosophy repeatedly articulated by Finance Minister Taiwo Oyedele that taxation should promote investment, formalisation, employment and economic growth rather than punish businesses for operating formally.
Oyedele has specifically argued that the reforms were designed to make the tax system fairer, simpler and more growth-friendly, while giving small businesses room to reinvest and expand. He famously canvassed streamlining of about 70 tax heads into just 10 to make compliance easy.
There are already encouraging signs on the revenue side, with numbers hitting a record N21.6 trillion, up 49 per cent in H1 2026. The Federal Government says the number of people registered for tax purposes has jumped from less than 10 million to more than 100 million, while thousands of informal businesses are reportedly seeking formal registration.
The bigger test, however, is what happens at the state and local government levels.
The experience of many Nigerian businesses remains out of sync with the provisions of the NTA.
Many still have to contend with a raft of sometimes questionable levies, fees, permits and charges from state and LG officials.
Worse, collection is often enforced by physical threats, sealing of premises and seizure of property. This undermines the credibility of the reforms.
The CBN’s Business Expectations Survey has repeatedly identified high and multiple taxation among the leading constraints on businesses. In its April 2025 survey, 74.5 per cent of respondents cited high/multiple taxes. The November 2025 survey similarly recorded 70.8 per cent.
According to a recent Nairamatrics survey, such demands include environmental levies, business-premises permits, sanitation charges, signage fees, development levies, waste-disposal charges, market fees, loading permits, fire-service charges and local-government operating permits.
This is sometimes on top of taxes already paid to higher tiers of government.
Duro Kuteyi, president of the Food and Agro-allied Processors’ Association, reportedly said some members face as many as 20 different taxes and levies.
The Manufacturers Association of Nigeria, in its Manufacturers’ CEOs Confidence Index for the second quarter of 2026, identified the persistence of multiple taxation as one of the key challenges constraining the operating environment for manufacturers during the period.
According to MAN, manufacturers continued to receive visits from different tax authorities and regulators demanding various taxes, levies and related payments, despite the ongoing tax reform.
For businesses operating in an economy already burdened by expensive energy, logistics, credit and imported inputs, every additional levy has a multiplier effect. Companies either absorb the cost and become less profitable, pass it on to consumers through higher prices, reduce investment or, in extreme cases, shut down or relocate.
The Nairametrics survey found that small businesses appear to be disproportionately affected as they often lack the resources to verify whether government demands are legitimate or challenge unlawful collections. Paying up is often viewed as a better alternative to business closure.
This situation is self-defeating. The government wants more businesses to formalise so it can broaden the tax base.
Yet multiple and unpredictable collections can make formalisation itself a liability. An entrepreneur who discovers that registration opens the door to a parade of government collectors has a strong incentive to remain informal.
This is why the Federal Government must now move beyond the enactment of the laws and ensure enforcement of their central principle.
One individual business should not be made to pay twice or more for the same governmental responsibility simply because three tiers of government have overlapping revenue ambitions.
The constitutional division of tax powers must be translated into a practical, nationally understood allocation of responsibilities. Fiscal federalism must not become fiscal fragmentation.
Corporate income tax, VAT and customs duties belong within federal administration; states have their defined sphere, particularly personal income taxation; and local governments have specified rates and levies.
Where a charge is lawful, its legal basis, collecting authority, rate and purpose should be transparent and readily verifiable.
More importantly, states and local governments must stop treating every economic activity within their jurisdictions as an opportunity to invent another revenue line.
The Joint Revenue Board has a critical role to play in correcting this anomaly. Its mandate to promote harmonisation across the three tiers must be diligently implemented.
The JRB should publish and continuously update a definitive national schedule of approved taxes, levies, rates and charges, identifying exactly who can collect what. Anything outside that schedule should be presumed unlawful until properly authorised.
The same principle must apply to the telecommunications industry. The continuing confusion over Right-of-Way charges is a particularly embarrassing example of government’s failure to practise the harmonisation it preaches.
Federal authorities have previously sought a uniform N145-per-metre benchmark, yet in 2025, for example, Lagos was reported to charge N6,264 per metre, Ogun N9,477 and Oyo N5,303. Some states have waived the charge altogether.
The result is an uneven cost structure that makes fibre deployment more expensive and slows digital infrastructure expansion.
The NCC has consequently identified harmonisation of RoW charges and a one-stop permitting system as issues requiring attention.
This is exactly the sort of policy incoherence that tax reform should eliminate.
There is also a need to confront the role of revenue contractors, many of whom are political cronies or associates.
Where governments outsource collection, contractors must not become freelance tax authorities.
The Harmonised Taxes and Levies framework being domesticated by states reportedly provides for accredited revenue officers and agents, prohibits cash collection and roadblocks for revenue collection, and seeks to simplify LG revenue administration. These provisions must be enforced rather than ignored.
The government should recognise the distinction that a charge does not become legitimate merely because it is called a levy, permit, fee or service charge. If several agencies impose substantially similar charges for the same underlying activity, the business experiences the same economic burden regardless of the terminology.
The ultimate measure of Nigeria’s tax reform, therefore, should not be how many laws have been passed, how many taxpayers have been registered or how aggressively revenue has risen. It should be whether a legitimate business can understand its tax obligations and pay them once through transparent channels.
For sure, Nigeria badly needs higher and more sustainable tax revenue to meet its 18 per cent tax-to-GDP ratio target. But the route to that objective is not an endless multiplication of collectors. It is a broader, more compliant and more productive economy.
The tax reforms have created the legal architecture for that transformation. The Federal Government must now address the politics of making the states and local governments comply.
If businesses continue to pay federal taxes and then face a raft of overlapping state and local levies, the reform will have solved taxation on paper while preserving multiple taxation in practice.
That would defeat the purpose of the tax reforms altogether.
