Speaking at the 2026 Tax Conference with the theme, “Tax Reforms and Global Relevance: Positioning Nigeria’s Tax System for a Sustainable Future” which is organized by the Chartered Institute of Taxation of Nigeria (CITN), in Abuja, he said the reforms were aimed at building a stronger fiscal foundation for long-term national development rather than increasing taxation.

Oyedele said the country’s previous tax system had been weakened by fragmented administration, multiple taxation, weak compliance and unstable revenues.

According to him,

“Countries that fail to modernise their fiscal frameworks risk losing competitiveness, discouraging investment, widening inequality, and weakening economic resilience. These are risks Nigeria cannot afford to take, and opportunities we cannot afford to lose.”

The minister pointed out that the reforms were designed to simplify taxation, reduce compliance burden, encourage investment and strengthen public trust in government.

He disclosed that minimum wage earners had been exempted from personal income tax, while measures were also being implemented to reduce the burden on low-income earners and improve business competitiveness, among others.

He said,

“Our tax reforms became necessary because, for many years, Nigeria’s tax system suffered from structural weaknesses, from non-harmonised taxes to fragmented administration, scarce and unstable revenues, weak compliance, and high levels of informality.

“Businesses faced numerous impediments from inefficient enforcement and rising compliance costs. Citizens often perceived the tax system as unfair because the burden was unevenly distributed. At the same time, revenues remained insufficient relative to our development targets.

“This model became untenable, and the system was simply unsustainable. The reforms we are implementing are therefore not about additional points of taxation. They are about building a stronger fiscal foundation for long-term national development.”

Oyedele stressed that the government’s approach was guided by a simple conviction that a good tax system should enrich the real economy, support economic growth, protect vulnerable demographics, and strengthen trust between government and citizens.

According to him, the reforms seek to simplify the tax system, improve coordination, reduce disruptions, encourage investment, promote voluntary compliance, and align taxation with productivity.

He said,

“We are moving from a framework driven by discretion and fragmentation to one anchored on clarity, certainty, and fairness.

“We do not operate in isolation. We must remain competitive, and competitiveness today depends significantly on the quality of a country’s fiscal architecture.

This is why our reforms incorporate internationally recognised best practices while remaining sensitive to Nigeria’s realities.”

According to the minister, one of the strongest complaints from businesses had been multiple taxation across different levels of government, adding that the government is working to modernise tax administration, improve coordination, and reduce the burden on taxpayers, especially low-income earners.

He said,

“If our tax system and laws are to facilitate a globally competitive economy, we must continue strengthening implementation across the federation.

“We are grateful to the states that have adopted tax modernisation laws in their various jurisdictions, and we encourage others to do the same sooner rather than later.”

Also, speaking at the conference, Mr. Innocent Ohagwa, president/ chairman of Council, Chartered Institute of Taxation of Nigeria (CITN), described taxation as a central pillar of Nigeria’s transition away from oil dependence.

Ohagwa commended the Tinubu administration, the National Assembly and other stakeholders for delivering the new tax laws, saying the reforms reflected a firm and collective commitment to sustainable economic development.

He urged tax professionals to support implementation of the reforms by promoting transparency, accountability and compliance across the system.

He said,

“As Nigeria shifts from a long-standing dependence on oil toward a more sustainable fiscal model, taxation has rightly emerged as a central pillar of our national revenue strategy.

“CITN has convened this 28th ATC under the theme to provide a critical platform for tax professionals, policy makers, administrators, members of the academia, business leaders and stakeholders-alike to rigorously interrogate the ongoing reforms, evaluate the challenges and identify how best they can strengthen our tax system for long-term sustainability, global competitiveness and enduring fiscal relevance.”

Ohagwa said,

“As tax professionals, our contributions have never been more crucial than now, particularly with reference to Sections Section 33(1) and Section 147 of the Nigeria Tax Administration Act (NTAA) 2025.

“As President of CITN, I call on all members across the public and private sectors to rise to the demands of this moment and support the implementation of the reforms.

“Every CITN member must become a stakeholder of the reform agenda by deepening their technical knowledge, upholding the highest ethical standards and providing sound, objective guidance to taxpayers, institutions, employers and government.”

He said,

“We must firmly reject practices that undermine compliance and instead uphold the principles of transparency, fairness, and accountability in all our engagements. As professionals, we must lead by example by ensuring full compliance with our own tax obligations before encouraging others to do the same.

“CITN stands ready to support the government, including the NRS, State Internal Revenue Services, the JRB, National Tax Policy Implementation Committee, office of the Tax Ombuds and all stakeholders, in achieving the objectives of these reforms.”

The government’s decision comes despite calls from opposition parties, civil society groups, and other stakeholders urging a pause for further review.

These groups have raised concerns that the gazetted versions of the laws may differ from what was passed by the National Assembly.

Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, made this known on Friday, December 26, 2025, in Lagos, after briefing President Bola Tinubu on the committee’s progress.

Speaking to journalists, Oyedele explained that out of the four tax reform laws, two have already taken effect since June 26, 2025.

These are the Nigerian Revenue Service Establishment Act and the Joint Revenue Service Establishment Act.

He added that the remaining two laws, the Nigerian Tax Act and the Nigerian Tax Administration Act, will officially take effect on January 1, 2026.

“We met with Mr President to provide an update on the implementation of the tax reform laws. As you are aware, there are four laws in total. Two of them, the Nigerian Revenue Service Establishment Act and the Joint Revenue Service Establishment Act, commenced on June 26, 2025,” Oyedele said.

“The remaining two laws, the Nigerian Tax Act and the Nigerian Tax Administration Act, are scheduled to commence on January 1, 2026.”

Meanwhile, the National Assembly has announced an internal review of the legislative process that led to the passage, presidential assent, and gazetting of the four major tax reform laws.

Oyedele reaffirmed the Federal Government’s commitment to working closely with the National Assembly and maintained that the reforms are designed to ease the tax burden on Nigerians, particularly low-income earners.

“We welcome the statement from the House of Representatives Committee regarding its findings and the review of allegations of alterations. The Federal Government is committed to working with the National Assembly if any action is required,” he said.

“However, the implementation of the two remaining laws will proceed as scheduled on January 1, 2026. These reforms are meant to bring relief to Nigerians, as the bottom 98% of workers will either pay no personal income tax or pay lower taxes.”

In an exclusive interview on the MicOn Podcast with Seun Okinbaloye, Oyedele explained how the reforms aim to widen the tax net, capture non-compliant taxpayers, and exempt low-income earners from paying taxes.

On the current state of compliance, Oyedele stated:

“Nigeria has over 200 million people. Based on employment data, about 86 million Nigerians are actively employed. You can argue how many of them can even afford to pay any tax in the tax nets across all 36 states and the FCT.

“The active number of taxpayers is less than 10 million. That math doesn’t add up. In any country in the world, developing, developed, or underdeveloped, you’d expect at least half of the employed population to be in the tax net. This means Nigeria has a long way to go to move from 10 million to around 40 million. When you go to businesses, the number is not much different.”

He further noted that most companies registered with the Corporate Affairs Commission (CAC) are not paying taxes, thereby distorting the economy.

“You will see with the corporate affairs commission, over a million companies are registered, actively paying taxes, barely 100,000. If you don’t fix that problem, we continue to distort the economy where honest people struggle to survive.”

Explaining how the government plans to expand the tax net, Oyedele said:

“This is the whole essence of the intelligence we are trying to piece together. What happens in your bank account when you travel abroad, how you use your payment card, electricity for your phone, all that information. We’ve also introduced what we call fiscalization, which is when you issue an invoice for goods or services, the government gets a copy automatically.

“What we’re trying to do with that is instead of relying on people to be honest and patriotic to tell us their income. We want to use the system to find out. Your primary role is to declare your income yourself. Then the government, on the other hand, does a system ecosystem validation.”

Oyedele also cautioned against false declarations, noting that the reforms include measures to ensure compliance.

“If you claim you earned N1 million last year and bought a new car, travelled abroad twice in Business class and spent lavishly, the system will flag discrepancies. While minor mismatches are not pursued, undeclared amounts can result in automatic debit from your bank account after due notice.”

He stressed that the reforms aim to modernise tax collection:

“Taxes can now be collected professionally through technology. There’s no need to go on the street with wood and nails to start beating people up to collect taxes. There are very decent ways of doing that in modern society, and Nigeria should not be the exception.”

Addressing claims about high prices of goods and services in January 2026, Oyedele clarified that the reforms are designed to reduce costs:

“I don’t see any reason for prices to increase under this new tax law. If anything, prices should fall, or at worst, remain stable.  These reforms are intended to stabilise the economy and tackle inflation. In reducing personal income tax, people will have more disposable income, lower costs of goods and services and increased affordability. Combined, this makes life more manageable for Nigerians.”

Announced by Zacch Adedeji, FIRS executive chairman the exemption aims to ease financial pressure on citizens and promote economic inclusion.

The new tax framework, the most significant overhaul since Nigeria’s independence, also seeks to simplify the tax system, broaden the tax base, and support small businesses.

“With these new laws, food, education, transport, and agriculture will be VAT-free,” Adedeji declared. “The President has fulfilled his promise to make businesses flourish by removing all burdens and hurdles. This is the best thing that has happened to Nigeria’s fiscal ecosystem since 1960.”

Key Details of the Reform

• The reforms combine multiple tax statutes into a single consolidated tax code, scheduled to take effect in January.
• Businesses with annual turnover below ₦50 million will be exempt from certain taxes.
• Personal income tax thresholds are adjusted upward to protect low-income earners.
• FIRS will be renamed the Nigeria Revenue Service (NRS) to reflect its broader mandate across all levels of government, not just federal.

Implications & Context

According to Adedeji, the reforms are already showing results: Nigeria’s tax-to-GDP ratio has risen from 10% to 13.5% in two years, with a target of 18% by 2027.

States have reportedly used increased revenues to repay ₦1.85 trillion in debts, while debt servicing burdens have dropped.

Despite potential short-term discomfort, Adedeji likened the reform process to the “pain of a woman in labour,” stressing that current interventions are cushioning impacts.

He also noted that a petrol surcharge included in the new law will only be activated by ministerial order and officially published before it takes effect.

[Source: Punch Newspapers]

Speaking at the opening of the IMF-supported Headquarters Mission at the Revenue House in Abuja, Paulo Paz, a senior economist at the IMF Fiscal Affairs Department, commended FIRS for its implemented reforms and reaffirmed the Bretton Woods institution’s backing for the new tax reform laws.

“We want to know how we can best support you with this new challenge. Our take on the four tax laws is, first, a recognition of the outstanding work that FIRS has been providing to the citizens.

“You have at the same time the recognition and new responsibilities with these very powerful laws, which will increase the relevance of the tax administration in Nigeria. I want to express our honour of being here and being a partner of FIRS. Thank you for your trust in our advice. We congratulate you on the good results so far. There is more to come, and we are here to help.”

Zacch Adedeji, chairman of FIRS, represented by his Chief of Staff, Tayo Koleosho, extended gratitude to the IMF for its continuous support, particularly noting the collaboration on digital transformation, VAT automation, and compliance automation.

In her remark, Bolaji Akintola, coordinating director, Corporate Services Group at FIRS, acknowledged the IMF’s pivotal role in the FIRS tax reforms aimed at boosting Nigeria’s domestic revenue.

She noted that with the IMF’s support, the FIRS conducted two systematic evaluations in 2018 and 2023 using the Tax Administration Diagnostic Tool (TADAT) to identify weaknesses.

Some of these identified issues have since been addressed in the four tax reform laws signed by President Bola Tinubu.

However, with the signing of four major tax reform bills into law, a new chapter may be underway. On Thursday, President Bola Tinubu signed the Nigeria Tax Reforms Bills, the Nigeria Tax Administration Bill, the Nigeria Revenue Service, and the Joint Revenue Board Bill.

The implementation of these laws is set for January 1, 2026, promising to ease the burden on low-income earners while ensuring higher-income individuals contribute more fairly.

You may have heard the news, but you’re probably still wondering; how does this make my life better? Here’s what it means for you as a business owner or a low-income earner.

Impact of the Tax Reform Bills

1. Fill PAYE Exemption for Low-Income Earners (Up to N1 million Per Annum):

If you earn N80,000 per month, your employer likely deducts Pay-As-You-Earn (PAYE) tax before your salary gets to you.

Under the new law, if your annual income is N1 million or less, you’ll keep your full salary, no more PAYE deductions.

That means more money in your hands to meet daily expenses.

2. Zero VAT on Basic Necessities:

Value Added Tax (VAT) will no longer apply to essential items like food, healthcare, education, and electricity.

This means that when you spend N20,000 on food or electricity, you get full value without losing part of it to VAT.  This is a direct relief for everyday living.

3. Corporate Income Tax Reduced from 30% to 25%:

For businesses, this tax cut means more available capital for operations, growth and hiring. A 5% tax reduction could be the difference between maintaining your current size and expanding into new markets or products.

4. Tax Exemption Threshold Raised from N25 million to N50 million:

Previously, as a business owner, if your business turnover in a year crosses the N25 million threshold, you have to pay tax.

This sometimes discourages businesses from scaling up, as increased turnover means additional costs without definitely increasing the business’ profit.

However, the increased threshold gives you more room to scale your business to profitability without necessarily incurring additional tax costs, encouraging growth and boosting entrepreneurial spirit.

5. No More Mandatory Audited Financial Statements for Small Businesses:

Small and medium enterprises will no longer be required to submit audited financial statements to file tax returns.

A simplified statement of accounts signed by the business owner will now suffice, saving costs on accounting services.

These tax reforms aim to relieve pressure on everyday Nigerians while creating an environment that supports business growth.

For low-income earners and small business owners, it’s an opportunity to save more, grow more and worry less about tax complexities.

The governors, at the end of their meeting, endorsed the sharing of the VAT proceeds on the basis of 50 per cent equality, unchanged from what is currently in operation; 30 per cent derivation, from 20 per cent currently in operation and 60 per cent that was proposed by the Presidential Tax Reform Committee headed by Mr. Taiwo Oyedele.

The governors also agreed on 20 per cent sharing on population basis, from 30 per cent which is the current allocation before the tax reforms proposal.

The tax reforms deal came as Senate yesterday projected a N100 trillion aggregate expenditure for the 2026 fiscal year, and vowed to free funds it said were being held by some government organisations.

Senator Solomon Adeola, chairman, Senate Committee on Appropriation, made the disclosure during a Stakeholders Public Hearing and Interactive Session on the 2025 Appropriation Bill. The session had the theme, “The 2025 Budget of Restoration: Securing Peace, Rebuilding Prosperity.”

Senator Natasha Akpoti-Uduaghan, the chairman of the Senate Committee on Local Content, said some stakeholders in the north were jittery about the tax reform bills because the region was ill-prepared for such fiscal legislation.

At the same time, some northern groups urged Nigerians, particularly northerners, to be wary of political actors using the current tax reforms debate as platform to advance their ambitions ahead of the 2027 general election.

However, Academic Staff Union of Universities (ASUU) reiterated its stance against the proposed Nigeria Tax Bill 2024, warning that it would spell doom for public universities in the country if implemented.

The communique of the governors’ meeting with members of the Presidential Tax Reform Committee in Abuja, held behind closed-doors, was signed by Abdul Rahman Abdul Razaq, chairman of Nigeria Governors’ Forum (NGF) and Governor of Kwara State.

The communique stated, “The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, arrived at more resolutions.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.

“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills

“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reforms Bills.”

Yesterday’s meeting between the governors and members of the presidential committee marked a major breakthrough, as the northern states’ governors, emirs and chiefs had last year rejected the proposed tax amendment bills sent to the National Assembly by the federal government.

They said it was capable of jeopardising the wellbeing of the people in the region.

The northern leaders said they were not against any policy that would ensure the growth and development of the country, but called for equity and farness in the implementation of all national policies and programmes to ensure that no geopolitical zone was marginalised.

Their position was contained in a communique signed by Chairman of Northern Governors’ Forum, Governor Muhammadu Yahaya of Gombe State, after a joint meeting with the traditional council in Kaduna.

The communique read, “Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly.

“The contents blare against the interests of the north and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model.

“This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed.

“In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and call on members of National Assembly to oppose any bill that can jeopardise the well-being of our people.

“For the avoidance of doubt, the Northern Governor’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country.

“However, the Forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised.”

By leveraging the power of the tax system, governments can implement progressive policies that promote social justice, close the gap of social marginalization, and create opportunities for all members of society.

This piece explores the potential of tax reform to combat poverty, promote inclusive growth, and drive economic prosperity, with a focus on strategies that prioritize equity, sustainability, and social impact.

Drawing from global best practices and examples across the African continent, we delve into how tax reform can be harnessed to build a more equitable and resilient society for the benefit of all.

In the rapidly evolving digital landscape, tax reforms are of utmost importance to keep pace with technological advancements and changes in the way we conduct business.

Many countries are in the process of modernizing their tax systems to adapt to the digital economy and ensure that all companies contribute their fair share of taxes.

A crucial aspect of contemporary tax reform is the efficient management and utilization of tax revenue.

This involves streamlining the tax system to minimize inefficiencies and ensure that tax revenue is allocated effectively. Simplifying the tax code can make it easier for individuals and businesses to abide by tax laws, promoting compliance and reducing waste.

Addressing tax avoidance and evasion by multinational corporations is another critical issue in tax reform in the digital age. With the proliferation of online business models, companies have exploited loopholes to shift profits to low-tax jurisdictions, undermining the fairness of the tax system. Governments are now cracking down on these practices to ensure that companies pay their dues.

One proposed solution to combat tax avoidance is the implementation of a digital services tax, which would tax revenue generated from online transactions and digital advertising. This measure aims to level the playing field between traditional and online businesses, while also generating additional revenue for governments.

Essentially, embracing tax reform in the digital age is vital to establishing fair, efficient, and effective tax systems.

By curbing tax avoidance, simplifying tax regulations, and investing tax revenue wisely, countries can create a sustainable and equitable tax framework for the future.

How can individuals effectively save and invest tax-efficiently to contribute to a true federalism model that delivers dividends of democracy in the digital age?

In the digital age, it is crucial to implement tax-saving and investment strategies that are efficient to support true federalism and ensure the effective delivery of dividends of democracy. This involves optimizing tax systems to generate revenue that can be invested back into society.

One key strategy is to focus on simplifying the tax code and making compliance easier for individuals and businesses.

By streamlining the tax process, it becomes more efficient for everyone to fulfil their tax obligations, leading to increased revenue for the government.

Additionally, it is important to address tax avoidance and evasion by implementing measures that target multinational corporations that exploit loopholes in the tax system.

This can include introducing digital services taxes on online businesses to ensure they pay their fair share of taxes, thus increasing government revenue that can be used to support federal initiatives.

Furthermore, investing tax revenue wisely is essential in delivering dividends of democracy. By allocating funds to areas that benefit the populace such as infrastructure, healthcare, education, and social welfare programs, the government can ensure that the benefits of tax revenue are distributed equitably across different regions, promoting true federalism.

Essentially, by implementing efficient tax-saving and investment strategies, addressing tax evasion, and allocating revenue in areas that benefit society, true federalism can be supported in the digital age, leading to the effective delivery of dividends of democracy.

What are the diverse ways in which efficient tax-saving and investment strategies aligned with global practices can be implemented to drive economic development through tax reform, considering examples across the African continent?

Implementing efficient tax-saving and investment strategies aligned with global practices is crucial for economic development through tax reform in various countries across the African continent. By adopting best practices from around the world and tailoring them to suit their specific needs, African nations can generate revenue, promote economic growth, and ensure equitable development.

Some examples of how countries in Africa are implementing such strategies:

1. Simplifying Tax Administration:

Many African countries are streamlining their tax systems to make them more user-friendly and efficient. For example, Rwanda has simplified its tax procedures, making it easier for businesses to comply with tax laws and reducing the compliance burden. This has led to an increase in tax compliance and revenue collection.

2. Addressing Tax Evasion:

African countries are cracking down on tax evasion, particularly by multinational corporations. For instance, Kenya has implemented a digital tax system that tracks transactions and helps prevent revenue leakage. By ensuring that all businesses pay their fair share of taxes, governments can increase revenue for economic development.

3. Digital Services Taxes:

Several African countries are considering or have implemented digital services taxes to capture revenue from the growing digital economy.

For example, Nigeria introduced a 7.5% Value Added Tax (VAT) on online transactions and services. These taxes help level the playing field between digital and traditional businesses while generating additional revenue for government programs.

4. Investment in Infrastructure:

Efficient tax-saving strategies involve allocating tax revenue to critical infrastructure projects that promote economic development. For example, Ethiopia has used tax revenue to invest in infrastructure such as roads, airports, and energy projects, driving industrialization and economic growth.

5. Public-Private Partnerships (PPPs):

African countries are increasingly turning to PPPs to finance infrastructure projects. PPPs leverage private sector resources and expertise, reducing the burden on government budgets. For instance, Ghana has utilized PPPs to fund projects like the Accra-Tema motorway and the Kumasi International Airport expansion.

By implementing efficient tax-saving and investment strategies aligned with global practices, African countries can boost economic development, reduce poverty, and promote social welfare. These examples demonstrate how tax reforms can drive sustainable growth and development across the African continent.

How can tax reform be effectively utilized to alleviate poverty, narrow the gap of social marginalization, and promote sustainability and economic prosperity?

Implementing effective tax reforms can play a significant role in reducing poverty, closing the gap of social marginalization, and fostering sustainability and economic prosperity.

By leveraging the tax system to address inequalities, support the most vulnerable populations, and promote inclusive growth, countries can create a more equitable and sustainable society. Here are some strategies for utilizing tax reform to achieve these goals:

Progressive Taxation: By implementing progressive tax systems that require higher earners to pay a larger proportion of their income in taxes, governments can redistribute wealth and reduce income inequality. This can help level the playing field, lift people out of poverty, and provide resources for social programs that support marginalized communities.

Social Spending: Investing tax revenue in social programs such as healthcare, education, social protection, and affordable housing can help reduce poverty and improve the well-being of disadvantaged groups. For example, countries like Brazil have successfully used targeted social spending programs funded by taxes to reduce poverty rates and improve social mobility.

Tax Incentives for Social Causes: Governments can use tax incentives to encourage private sector investment in initiatives that address social issues and promote sustainable development. For instance, offering tax breaks to companies that invest in renewable energy or provide job training for marginalized populations can help close social gaps while stimulating economic growth.

Combatting Tax Evasion and Corruption: Strengthening tax enforcement mechanisms, improving transparency, and combating tax evasion and corruption are essential for ensuring that tax revenue is collected and allocated effectively. By closing loopholes and promoting accountability, governments can increase public trust, generate more resources for poverty reduction, and reduce social marginalization.

Green Tax Reforms: Introducing environmentally-friendly tax policies, such as carbon taxes or renewable energy incentives, can promote sustainable development while addressing social issues. These measures can stimulate green innovation, create green jobs, and reduce carbon emissions, contributing to long-term economic prosperity.

Emphatically, by utilizing tax reform as a tool for social justice, poverty reduction, and sustainable development, countries can build more inclusive and resilient economies that benefit all members of society.

Prioritizing fairness, equity, and long-term sustainability in tax policies can help close the gap of social marginalization and pave the way for shared prosperity.

The power of tax reforms to reduce poverty, address social marginalization, and foster sustainable economic development cannot be overstated.

By implementing progressive taxation, investing in social spending, incentivizing private sector investment in social causes, combating tax evasion and corruption, and promoting green tax reforms, governments can create a more equitable and inclusive society that benefits all individuals, regardless of their background or circumstances.

Through a holistic approach to tax policy that prioritizes fairness, equity, and long-term sustainability, countries can pave the way for shared prosperity and a brighter future for generations to come.

As we navigate the challenges of the digital age and strive for true federalism in the delivery of dividends of democracy, harnessing the potential of tax reform as a catalyst for social change is paramount to building a more just, prosperous, and resilient world for all.

This was after the apex bank said it had approved two operations: $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF) and $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR).

This combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilise the economy and scale up support to the poor and most economically at risk, according to a document released by the world’s apex bank.

The document dated June 13, 2024, said the loan further supports Nigeria’s ambitious, multi-year effort to raise non-oil revenues and safeguard oil revenues, promote fiscal sustainability, and provide sufficient resources to deliver quality public services.

The $1.5bn loan disbursed to Nigeria was structured in two tranches with different maturity periods.

The first tranche was a $750m credit from the International Development Association, featuring a 12-year maturity and a six-year grace period.

The second tranche, a $750m loan from the International Bank for Reconstruction and Development, has a 24-year repayment period with an 11-year grace period.

The first tranche of $750m was disbursed on July 2, 2024, while the second tranche, tied to the fulfillment of specific economic reform conditions, was disbursed in November 2024.

The bank said that the RESET DPF is focused on supporting Nigeria to strengthen its economic policy framework by creating fiscal space and protecting the poor and economically insecure. The ARMOR PforR will support efforts to implement tax and excise reforms, strengthen tax revenue and customs administrations, and safeguard oil revenues.

The bank said, “Confronted with a fragile economic situation, Nigeria recognized the urgency of changing course and embarked on critical reforms to address economic distortions and strengthen the fiscal outlook. Initial critical steps to restore macroeconomic stability, boost revenues, and create the conditions to reignite growth and poverty reduction have been taken.

“These include unifying the multiple official exchange rates and fostering a market-determined official rate, as well as sharply adjusting gasoline prices to begin to phase out the costly, regressive, and opaque gasoline subsidy.

“The Central Bank of Nigeria (CBN) has refocused on its core mandate of price stability and is tightening monetary policy including by increasing interest rates, as is appropriate to reduce inflation. A targeted cash transfer program is being rolled out to cushion the impact of high inflation on the poor and economically insecure households.”

“The Borrower has satisfied the conditions for the release of the second tranche consisting of the US$750 million loan, as outlined in the Loan Agreement and described below. The three-tranche release conditions for the second tranche have been satisfactorily completed. The macroeconomic framework continues to be adequate for this operation. Despite considerable pressures on the economy and households, the authorities are staying the course with challenging measures to restore macroeconomic stability and create the foundations for sustained and inclusive growth.

“Furthermore. The Government has successfully carried out the program as outlined in the Letter of Development Policy, dated May 3, 2024, with progress along all areas supported by the DPF.”

The bank quoted the Minister of Finance and Coordinating Minister of the Economy, Wale Edun as saying “We have embarked on bold and necessary reforms to restore macroeconomic stability and put the country back on a sustainable and inclusive economic growth path that will create quality jobs and economic opportunities for all Nigerians.

“We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our macro-fiscal and social protection policy reforms, consistent with accelerating investment and redirecting public resources sustainably to achieve development priorities.”

The World Bank document read, “This document summarises the progress made under the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing for the Federal Republic of Nigeria (Borrower or Recipient), which was approved by the Executive Directors on June 13, 2024.

“The DPF is a standalone operation comprised of two tranches: (1) first tranche comprising $750m credit from the International Development Association (Association) (Shorter Maturity Loan terms with 12-year maturity and grace period of 6 years, Credit No. 7567-NG); and (2) second tranche comprising $750m loan from the International Bank for Reconstruction and Development (Bank) (US dollar-denominated, commitment-linked loan with 24-year maturity and grace period of 11 years, Loan No.9683-NG).

“The Financing Agreement and Loan Agreement were signed and declared effective on June 19, 2024 and June 26, 2024, respectively. The first tranche was released on July 2, 2024.”

The World Bank commended the government for not only meeting the condition but exceeding expectations by fully deregulating the fuel market.

The document noted, “In terms of implementation, while the TRC [Tranche Release Conditions] formulation required introducing the change over a specified time-bound implementation period, the Borrower has moved ahead and made the change immediately, thereby overachieving the TRC in this respect.

“Effective October 2024, the price of PMS has been determined by the international market and the exchange rate set by the Central Bank of Nigeria.”

Commenting on the loan, the World Bank Vice President for Western and Central Africa, Ousmane Diagana said “Nigeria’s concerted efforts to implement far-reaching macro-fiscal reforms place it on a new path which can stabilize its economy and lift its people out of poverty. It is critical to sustain the reform momentum and continue to scale up and expand protection to the poor and economically at risk to cushion the effects of cost-of-living pressures on citizens.

“This financing package reinforces the World Bank’s strong partnership with Nigeria, and our support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa.”

Oyedele added that workers earning the new minimum wage and slightly more will also be fully exempted from tax obligations.

Addressing various tax issues on X (formerly Twitter), Oyedele said these thresholds will result in over 90 per cent of workers in the public and private sectors paying lower taxes while high income earners will pay slightly more in a progressive manner up to 25 per cent for the ultra-high net worth individuals.

His explanation came against the backdrop of general concerns that workers might pay more under the proposed tax reform initiatives of the federal government.

Oyedele also said planned changes to the current tax table of personal income brackets and rates was to discourage arbitrage in some cases between the two income tax regimes.

He said the current tax table was introduced in 2011, stating that due to high inflation and lack of review, the structure has resulted in “fiscal drag” where many low income earners have been pushed to the top tax bracket over time.

This, he said, meant that an individual earning just N400,000 a month was paying the same top marginal income tax rate as a wealthy individual earning about N20 million per month.

He said, “Therefore, the tax table has become regressive rather than progressive, as it was originally designed.

“Also, the current personal income tax regime does not encourage formalisation given that the effective top tax rate on companies is nearly double that of enterprises, which also encourages arbitrage in some cases between the two income tax regimes.

“Hence, the proposed changes seek to address these issues and simplify the system by incorporating current reliefs and allowances into the bands and rates to achieve an overall lower effective tax rate for the majority of workers.”

Further addressing concerns over taxation of workers’ income in the proposed regulation, Oyedele clarified that apart from the N800,000 per annum, which was exempt from tax, there was a rent relief of up to N200,000 per annum, which together will exempt individuals earning up to N1 million per annum (about N83,000 per month).

He said,

“This is particularly beneficial to low income earners. Also, the new tax bands and rates have been designed to avoid a situation where individuals earning slightly more than the exemption threshold are taxed to an extent that makes them worse off than a person whose income is within the exemption threshold.

“For example, a person earning N30,000 per month is exempt from tax while a person earning N30,001 per month will pay about N500 leaving the latter with a net of N29,500 which is N500 worse than the person earning N30,000.

“Under the tax bills, this problem has been addressed, as everyone will be eligible to the first tax-free bracket.”

Furthermore, Oyedele said statutory deductions, including pension and National Housing Fund contributions, were still applicable under the new tax bills.

According to him, “These are contributions under the National Housing Fund, National Health Insurance Scheme, Pension Reform Act, interest on loans for developing an owner-occupied residential house, annuity or premium paid for life insurance, and rent relief up to N200,000 per annum.”

He said while part of the objectives of tax reforms was simplification, the impact of the

Consolidated Relief Allowance (CRA) and Personal Relief had been incorporated into the tax table such that the overall goal of exempting low income earners and reducing taxes for middle income earners was achieved.

Addressing worries over the removal of CRA and personal relief, which seemingly amounted to giving a relief with one hand and taking it back with the other, Oyedele pointed out,

“By integrating the reliefs into the tax brackets and rates, many taxpayers with basic education would be able to calculate their taxes with little or no assistance thereby achieving the dual objectives of lower tax burden and tax simplification.”

On suggestions that the tax rate for the second band seemed quite steep, moving from zero per cent to 15 per cent, he said, “By comparison, the second band under the bills, which is to be taxed at 15 per cent, is currently being taxed at a marginal rate of 21 per cent even after all reliefs and allowances.

“So, while the 15 per cent may appear steep from zero per cent for the first band, it is lower compared to the current tax table.

“The real impact for a person earning about N3 million per annum equivalent to the aggregate of the first and second brackets is a lower effective tax rate of 10 per cent compared to about 12 per cent under the current tax table.”