The Federal Inland Revenue Service (FIRS) has confirmed that under Nigeria’s sweeping tax reforms, food, education, agriculture, and shared transportation will be exempt from value-added tax (VAT).
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]
