Authored By : Marvelous Idisi
University of Abuja
ABSTRACT
The 2025 Nigerian Tax Reform Acts, comprising the Nigerian Tax Act (NTA), Nigerian Tax Administration Act (NTAA), and Joint Revenue Board Act (JRBA), and Nigerian Revenue Service (Establishment) Act represent the most significant restructuring of Nigeria’s tax system in decades. These Acts consolidate several fragmented laws, redefine administrative structures, and introduce substantive reforms intended to simplify compliance, improve revenue generation, and align Nigeria’s tax framework with contemporary global standards. This paper offers a legal appraisal of the reforms, examining the historical complexity of Nigeria’s tax regime, the reason for consolidation, the substantive legal innovations introduced, and the potential challenges that accompany their implementation. Through doctrinal analysis, this work evaluates loopholes in the former tax system, highlights innovations under the new Acts, interrogates the issues that persist, and proposes practical recommendations for strengthening Nigeria’s evolving tax architecture.
Keywords: Nigerian Tax Act (NTA), Nigerian Tax Administration Act (NTAA), Joint Revenue Board Act (JRBA), Tax consolidation, Tax administration, Fiscal federalism Tax compliance Tax law reform corporate taxation, Personal income tax Capital gains tax, Multiple taxation, Tax jurisdiction, Enforcement, Revenue generation, Judicial interpretation.
1.INTRODUCTION
Taxation is a foundational component of statehood and governance. It provides the fiscal resources required for public services, infrastructure, and national development. In Nigeria, however, the tax system has historically been plagued by multiplicity of taxes, overlapping jurisdictions, administrative inefficiency, and inconsistent enforcement. These weaknesses contributed to chronic underperformance in tax-to-GDP ratios and widespread non-compliance among companies.
The 2025 Tax Reform Acts are intended to address longstanding structural problems. Their significance lies in their attempt to unify, simplify, and modernize Nigeria’s tax regime. As a comprehensive reform package, the Acts aim to reduce the burden of multiple taxation, increase clarity and predictability, facilitate investment, and enhance federal-state coordination. Understanding their legal implications is essential for policymakers, legal practitioners, scholars, and taxpayers.
2.0 HISTORICAL BACKGROUND AND PROBLEMS WITH PREVIOUS REGIMES
Before 2025, Nigeria’s tax regime consisted of numerous statutes, including the Companies Income Tax Act (CITA), Personal Income Tax Act (PITA), Value Added Tax Act (VAT Act), Capital Gains Tax Act (CGT Act), Petroleum Profits Tax Act (PPTA), Stamp Duties Act, and others. Each statute had its own definitions, procedures, exemptions, and enforcement mechanisms. This fragmented system created several challenges:
- Multiplicity of Taxes: Businesses often faced overlapping levies at federal, state, and local levels—many lacking clarities on charging authority.
- Administrative Overlap: Agencies such as the Federal Inland Revenue Service (FIRS), state internal revenue services, and local governments often exercised conflicting mandates.
- Legal Ambiguity: Differing statutory definitions of income, gains, residency, and exemptions created uncertainty and frequent disputes.
- Compliance Burden: Companies had to file separate returns for various taxes, often to different authorities, increasing administrative and financial strain.
- Frequent Litigation: Conflicts over revenue jurisdiction, such as between federal and state governments, contributed to legal instability.
Cases like A.G. Ogun State v. Aberuagba and Nigerian Breweries Plc. v. Lagos State IRS epitomized the tension between federal and state taxing powers. The judiciary often attempted to clarify jurisdictional boundaries, but piecemeal decisions could not cure the systemic fragmentation. . More often than not, these piecemeal decisions as authoritative as they may be, do not solve the administrative and organizational issues, thus, the inclusion of the administrative reforms.
The 2025 reforms were conceived to achieve several overarching objectives:
- Consolidate major tax statutes into a unified framework;
- Simplify compliance and reduce administrative burdens;
- Modernize Nigeria’s tax system to reflect global best practices;
- Strengthen federal-state coordination and eliminate overlapping jurisdictions;
- Broaden the tax base while protecting low-income earners;
- Increase transparency, accountability, and taxpayer protection.
These objectives form the analytical lens through which the new Acts will be appraised.
- 0 LEGAL FRAMEWORK
- The Nigerian Tax Act (NTA)
The NTA consolidates previously scattered taxing statutes into a single governing legislation. It introduces uniform definitions of taxable income, gains, residency, and business presence. The Act also replaces numerous levies with a harmonized system, including the new Development Levy, which subsumes several sector-specific charges. It further introduces modern corporate tax provisions such as a minimum effective tax rate and controlled foreign company (CFC) rules. - The Nigerian Tax Administration Act (NTAA)
The NTAA provides the procedural and administrative architecture for the tax system. It establishes rules regarding registration, filing, assessments, penalties, enforcement, audits, taxpayer rights, and dispute resolution. Notably, the Act reconstitutes the Tax Appeal Tribunal and codifies clearer procedures for objections and appeals. - The Joint Revenue Board Act(JRBA)
Replacing the erstwhile Joint Tax Board, the JRBA coordinates federal, state, and local tax agencies. It harmonizes administrative practices, prevents double taxation, and promotes consistent interpretation across Nigeria’s federating units. The JRBA also serves as a conflict-management mechanism between tiers of government and created the Tax Ombudsman. - Nigerian Revenue Service (Establishment) Act
Establishes the Nigeria Revenue Service (NRS) as the federal tax authority, Outlines the powers, duties, and functions of the NRS Provides for registration, assessment, and collection of taxes at the federal level. Coordinates with the JRB and states for tax administration. Modernizes revenue administration using digital systems and taxpayer databases.
Although the 2025 Acts are relatively new, earlier judicial interpretations of tax powers continue to guide their application. Historically, courts have adopted a restrictive approach to taxation: a tax must be expressly authorized by statute. In Aberuagba, the Supreme Court affirmed that states lack authority to impose taxes outside the constitutional residual list. Similarly, in Nigerian Breweries, the court criticized multiplicity of taxes and emphasized the need for harmonization.
5.0 DEFICIENCIES IN THE PREVIOUS REGIME
The former tax system suffered from both substantive and administrative weaknesses:
- Overlap of Jurisdiction: Federal and state authorities frequently imposed similar taxes, creating confusion and double taxation.
- Archaic Definitions: Many statutes, particularly CITA and PITA, contained outdated provisions inconsistent with modern commercial realities.
- Ease of Evasion: Fragmentation enabled companies to exploit loopholes, shifting income between federal and state taxes or exploiting gaps in definitions.
- Weak Enforcement: Limited digital infrastructure, low capacity, and inconsistent administration hindered effective compliance.
These loopholes justified the overhaul embodied in the 2025 reforms:
6.0 KEY PROVISIONS AND NEW DEVELOPMENTS OF THE NIGERIA TAX ACT, 2025. AND THE JOINT REVENUE BOARD ACT.
The Nigeria Tax Act, 2025 represents a comprehensive overhaul of the country’s tax legislation, establishing a modernized framework for personal income tax, corporate taxation, rental income, and other fiscal obligations. By consolidating multiple laws into a unified tax statute, the Act simplifies interpretation and compliance for individuals, businesses, and revenue authorities alike. This reform also introduces measures to address emerging economic realities, including the taxation of digital assets. This also includes new corporate incentives, and institutional strengthening. The act was quite sensitive to the nature of the business world by ensuring that losses from transaction of digital assets are deducted from profits.
6.1 Personal Income Tax
The Act provides clear guidance on the taxation of individuals. Section 30 defines chargeable income as the total income of an individual, less eligible deductions such as contributions to the National Housing Fund, the National Health Insurance Scheme, pension contributions, and interest on residential housing loans. Under the Fourth Schedule, individual income tax rates range progressively from 0% for income up to ₦800,000 to 25% for annual income exceeding ₦50,000,000. Section 163 further exempts incomes below the national minimum wage, pensions, gratuities, redundancy payments, and income from labeled startups held for 24 months.
6.2 Corporate Tax
Corporate taxation under the Act accommodates businesses of varying sizes. Section 27 defines the chargeable income of companies, encompassing assessable profits and chargeable gains. Section 56 sets tax rates at 30% for large companies while exempting small companies. Section 57 mandates a minimum effective tax rate of 15% for large corporations with turnover exceeding ₦20 billion, ensuring that multinational enterprises contribute fairly to Nigeria’s revenue base.
The Act distinguishes between allowable and disallowed deductions, with Section 20 permitting deductions for business-related expenses such as interest on debt, rent, salaries, repairs, pension contributions, and research and development costs. Section 21, however, prohibits deductions for capital repayments, private expenses, taxes, penalties, and non-arm’s-length transactions
6.3 Rental Income and Related Provisions
Rental income is included as part of chargeable income for individuals under Section 30, while Section 163 exempts rental income received by real estate investment companies if at least 75% of such income is distributed to shareholders within twelve months. Section 14(6) taxes employer-provided accommodation as benefits-in-kind, capped at 20% of annual gross income. agreements for land or buildings, except where the annual value is below ₦10 million.
6.4 Institutional Reforms and Modernization Measures
The 2025 Acts also bring significant institutional reforms. The establishment of the Nigeria Revenue Service (NRS) and the strengthening of the Tax Appeal Tribunal improve administrative coherence and taxpayer access to dispute resolution. Controlled foreign company rules aim to prevent profit shifting and untaxed accumulation abroad, while the reformed incentive regime ensures that benefits are performance-based and aligned with economic development goals. Revised personal income tax thresholds protect low-income earners by raising the exempt band, and expanded capital gains tax coverage now includes digital assets and modern forms of property.
Collectively, these reforms modernize Nigeria’s tax framework, balancing the need for equitable revenue generation, simplified compliance, and economic growth. By consolidating laws, introducing minimum tax standards for large corporations, it will reduce the friction between the Federal and State levels. It further creates more room by expanding coverage to emerging digital sectors, and strengthening institutional capacity, the 2025 Acts mark a significant step toward a transparent, efficient, and globally-aligned fiscal system.
6.5 Jurisdictional Reforms
The Joint Revenue Board (JRB), created under the Joint Revenue Board Act, 2025, acts as Nigeria’s central coordinating authority for tax administration, resolving long-standing issues of overlapping tax collection and federal–state disputes. Section 4 outlines its key functions, including harmonizing tax laws, coordinating tax collection, and facilitating information sharing across all government levels to eliminate duplication and reduce confusion. Section 6 requires the JRB to maintain a central taxpayer database, preventing double taxation and strengthening compliance. Additionally, Section 8 provides a structured mechanism for resolving intergovernmental tax disputes, reducing litigation and encouraging cooperative administration.
However, in as much as the Tax Reform Acts has provided solutions for some of the existential challenges that constrained the Nigerian Tax ecosystem, there are few issues that may arise.
7.0 Issues and Challenges with the New Acts
The implementation of the new tax reform framework is not without challenges. First, the transition to a unified tax statute after decades of fragmented legislation may produce temporary uncertainty, as businesses must adjust their tax planning strategies, compliance processes, and accounting systems. Second, the effectiveness of institutions such as the Nigeria Revenue Service (NRS) and the Joint Revenue Board Act (JRBA) will depend heavily on the availability of trained personnel, adequate technology, and institutional independence. Without strong implementation capacity, the reforms risk losing momentum.
Third, the increased corporate tax burden presents potential economic implications. While large corporations may be able to absorb the minimum effective tax rate, its strict enforcement could discourage investment in capital-intensive sectors. Similarly, the upward revision of capital gains tax for companies may influence decisions relating to asset acquisition and disposal. Fourth, despite the harmonization efforts of the JRBA, federal–state tensions over taxing powers may persist, particularly in relation to consumption taxes and levies administered at the local government level.
Finally, concerns remain regarding possible over-centralization. If not carefully managed, the consolidation of tax administration under the NRS could diminish the autonomy of state revenue authorities, undermining the federal structure upon which Nigeria’s fiscal system is built.
In conclusion, a truly sustainable tax regime requires more than legislative innovation; it demands effective institutional practice. Moving forward, emphasis must be placed on bridging the gap between statutory reform and administrative reality by enhancing taxpayer education, deploying technology for enforcement, strengthening intergovernmental coordination, and ensuring transparent and efficient dispute-resolution mechanisms.
8.0. RECOMMENDATIONS
- Government should invest heavily in training tax administrators, updating digital infrastructure, and improving data analytics for tax assessment and collection.
- Publish Detailed Administrative Guidelines
Clear guidance notes on implementation of the NTA, NTAA, and JRBA will reduce uncertainty and prevent inconsistent interpretations. - Promote Fiscal Federalism Through Collaboration
Federal and state tax authorities must engage in joint training, policy dialogues, and harmonized enforcement strategies to prevent renewed conflicts. - Enhance Dispute Resolution Mechanisms
The Tax Appeal Tribunal should be adequately funded, staffed by specialized judges, and empowered to resolve disputes promptly. - Improve Public Awareness and Compliance Programs
Taxpayer education campaigns will reduce ignorance-based non-compliance and foster trust in the tax system. - Monitor Impact of Strengthen Institutional Capacity Corporate Tax Changes
The federal government should periodically assess how the minimum effective tax rate and increased CGT affect investment, ensuring that tax policy does not inadvertently stifle economic growth.
CONCLUSION
The 2025 Nigerian Tax Reform Acts constitute a bold attempt to rewrite the architecture of Nigerian taxation. By consolidating statutes, harmonizing administrative structures, and modernizing substantive rules, the reforms promise greater clarity, fairness, and efficiency. While challenges remain particularly in implementation, federal-state relations, and transitional adaptation the reforms lay a strong foundation for a more coherent and effective tax system. With sustained political will, institutional strengthening, and continuous evaluation, the 2025 Acts can significantly transform Nigeria’s fiscal landscape and support long-term national development.
REFERENCES
Statutes and Acts
- Nigerian Tax Act, 2025.
- Nigerian Tax Administration Act, 2025.
- Joint Revenue Board Act, 2025.
- Companies Income Tax Act (CITA), Cap. C21, Laws of the Federation of Nigeria (repealed 2025).
- Personal Income Tax Act (PITA), Cap. P8, Laws of the Federation of Nigeria (repealed/partially subsumed 2025).
- Value Added Tax Act, Cap. V1, Laws of the Federation of Nigeria (pre-2025).
- Capital Gains Tax Act, Cap. C1, Laws of the Federation of Nigeria (pre-2025).
- Petroleum Profits Tax Act, Cap. P13, Laws of the Federation of Nigeria (pre-2025).
- Stamp Duties Act, Cap. S8, Laws of the Federation of Nigeria (pre-2025).
Cases
- A.-G. Ogun State v. Aberuagba, Supreme Court of Nigeria.
Articles
- Koleade Adeoye & Mofolajesusewa Oyelami, Nigerian 2025 Tax Reform Acts Explained: Key Changes, Business Impacts, and Compliance Strategies, Berkatilly, (Aug 23, 2025)
- Douebi Febaide, What The New Tax Reform Acts Mean for Business (Names) Owners in Nigeria, Mondaq (Nov 6, 2025)
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