Tax reform is not a single law. This is a group made up of four new groups, each with a specific goal but working together:
Nigerian Tax Act (NTA): This explains what is taxed, who should pay it and how much they must pay.
Nigerian Tax Administration Act (NTA): Focus on the tax process – file, pay and manage your taxes online.
Nigerian Revenue Service Act (NRSA): This enables the Inland Revenue Service (currently known as FIRS) to carry out its work better and more fairly.
Joint Board of Revenue Act (JRBA): This helps federal and state tax agencies work together so you’re less likely to be taxed twice for the same thing.
What does reform mean to you?
Changes in the tax system have different impacts on wage earners and businesses.
If you are a working class person
Among the most important changes is the personal income tax (PIT) system.
Explicit exemption limits: If your annual income is ₦800,000 or less, you do not have to pay income tax. This provides immediate breathing space to low-income earners.
Comprehensive Relief Allowance (CRA): Targeted relief now replaces the CRA. Now, instead of getting a blanket allowance, you get concentrated relief. For example, you can apply for 20% rent relief (capped at ₦500,000).
Exemptions and deductions: Pension, housing and health insurance contributions are fully deductible. The more secure you are for the future, the less you pay now.
Electronic Transfer Tax (EMTL): This levy is now transferred exclusively to the states as part of stamp duty. Small transfers are tax-free, but large transfers may be subject to a small tax.
If you are a business owner or freelancer
If you run an SME, freelance or have a side hustle, the tax system now encourages you to grow rather than drain you dry.
Corporate Income Tax (CIT): Businesses with an annual turnover of less than £50 million now pay zero corporation tax. This is a huge win for SMEs. You pay taxes on the income you earn, not the assets you own. For example, if you have N1 million in your current account, there is no taxable income. But if that N1m is transferred to a savings account and earns 10% interest, you will be taxed on the 10% interest earned and not the original N1m.
Value Added Tax (VAT): Still 7.5%, but the invoice is digitalized, automating the calculation. Essential goods such as food, education and healthcare remain exempt from VAT.
tax benefits: Sectors such as technology, agriculture and renewable energy receive special incentives to encourage growth.
Other good things you should know:
FGN Bonds and Insurance: Interest and payments remain tax-free.
Retirement Savings: Contributions, growth and withdrawals – remain tax-free.
in stock: There is no tax on owning them, but selling them for a profit will incur gains taxes.
rent relief: 20% reduction in rental tax (up to ₦500,000).
Gifts and legacies: Still no taxes paid.
The message is clear: invest, grow, and formalize your hustle without fear.
Links you may like
(optional click)
1. If you need consultation or business negotiation, please contact me 08136125128 WhatsApp
wa.me/2348136125128
2. Visit my blog for more news:
www.edesonlinenews.com
3. I register my business name, limited liability company, NGO, social club, etc. with the Corporate Affairs Commission. I assist people in applying for international passports at the Nigeria Immigration Service. WhatsApp number; 08136125128.
4. I design websites, blogs, and graphics. I also teach website design in Ikotun Lagos State. I publish an app on Google PlayStore.
5. I sell premium WordPress themes/plugins, e-books, computer software and other digital products EdesonDigitalStore.com.ng
6. Learn more about my products and services on my company website:
www.edesoninfotech.com.ng
7. Connect with me on LinkedIn:
https://lnkd.in/gEC32Fin
8. Join my free website and make money
freelancer.edesoninfotech.com.ng
9. I sell recharge card printing software and mini printers
….
