The International Monetary Fund (IMF) has urged Nigeria and other major African economies to strengthen fiscal, monetary and governance reforms as part of efforts to improve economic stability and promote broader-based growth.

In its assessment of reform priorities across eight of the African Union’s largest economies, the IMF identified fiscal reform as a key priority in all but one of the countries reviewed. For Nigeria, the areas highlighted include tax policy, revenue collection, public financial management and more efficient government spending.

The Fund also identified improvements to monetary policy frameworks and policy transmission as priorities for Nigeria, Egypt and Ethiopia. In Nigeria’s case, it said governance reforms should include stronger fiscal transparency, better public financial management and improved anti-corruption measures.

The IMF said stronger domestic revenue mobilisation and more transparent and efficient public spending would help African economies build more resilient institutions. It argued that stronger fiscal and monetary frameworks can support sustainable and inclusive economic growth.

Nigeria’s tax reform agenda

The recommendations come as the Federal Government continues to implement a wide-ranging reform of Nigeria’s tax system. The new framework, which took effect in January 2026, is built around the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.

The reforms are intended to simplify tax administration, remove overlapping taxes, improve compliance and broaden government revenue. They are also designed to reduce the regulatory and tax burden on smaller businesses.

However, businesses continue to cite taxation as a major operating challenge. The Central Bank of Nigeria’s July 2026 Business Expectations Survey found that 70.8 per cent of respondents identified high and multiple taxation as their biggest constraint, ahead of insecurity and high interest rates.

For the housing and construction sectors, the quality of fiscal policy has direct implications. Developers, contractors and property businesses operate within a wider environment shaped by taxation, public infrastructure spending, interest rates and access to finance. Changes that improve tax administration while reducing unnecessary duplication could affect project costs and investment decisions.

Monetary policy remains a concern

The IMF’s call for stronger monetary policy frameworks follows an aggressive tightening cycle by the Central Bank of Nigeria (CBN) in recent years.

After Olayemi Cardoso became CBN governor in 2023, the bank pursued tighter monetary and liquidity conditions alongside foreign exchange reforms. The measures were aimed at addressing inflationary pressures, strengthening market confidence and improving macroeconomic stability.

The Monetary Policy Rate stood at 18.75 per cent in 2023 before the CBN began raising it in 2024. The benchmark rate increased to 22.75 per cent in February 2024 and eventually reached 27.5 per cent by the end of that year.

The CBN also increased banks’ Cash Reserve Ratio from 32.5 per cent to 45 per cent in early 2024 and later to 50 per cent as part of efforts to reduce excess liquidity.

The policy environment has since moved towards gradual easing as inflationary pressures moderated and economic conditions improved. Presidential aide Tope Fasua has nevertheless argued that the country should reconsider its tight monetary stance, warning that persistently high interest rates could restrict economic expansion without delivering the desired reduction in inflation.

Financing risks and infrastructure

The IMF’s concerns also extend to Nigeria’s approach to sovereign financing. In June, the Fund cautioned the country over plans to raise as much as $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.

The IMF warned that such structures can expose governments to significant risks because their terms may be difficult to evaluate fully.

The Federal Government has also secured about $1.2 billion in financing from the United Arab Emirates for construction of a major section of the Lagos–Calabar Coastal Highway.

Infrastructure financing remains important to Nigeria’s wider development prospects because transport networks and public investment influence access to housing, construction activity, land values and the expansion of urban centres.

For Nigeria, the IMF’s recommendations therefore extend beyond macroeconomic indicators. Stronger public finances, effective monetary policy, transparent governance and disciplined infrastructure financing can shape the operating environment for businesses and determine how effectively public resources support economic and urban development.

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Nigeria’s tax collections rose to ₦27.1 trillion within the first seven months of 2026, according to the Nigeria Revenue Service (NRS), highlighting the continued growth of government revenue from taxation.

The revenue performance comes as the Federal Government continues efforts to strengthen domestic revenue mobilisation and reduce dependence on volatile sources of government income. The NRS is responsible for administering federal taxes and improving compliance among taxpayers across the country.

The latest collection figure reflects the growing importance of taxation to Nigeria’s public finances. As government spending demands increase, stronger domestic revenue mobilisation remains critical to financing infrastructure, social programmes and other development priorities.

The NRS has continued to focus on improving tax administration, expanding the country’s taxpayer base and making collection processes more efficient. Greater use of digital systems and data-driven monitoring is also expected to improve compliance and reduce revenue leakages.

For businesses and individuals, the increase in tax collections could signal a stronger emphasis on tax compliance as authorities continue to broaden the formal tax base. The challenge for government, however, will be ensuring that higher revenue collections are matched by efficient and transparent public spending.

Increased tax revenue could provide additional fiscal space for investment in critical infrastructure, including roads, housing, electricity, healthcare and other public services. This is particularly important as Nigeria faces significant infrastructure and housing needs across its rapidly growing population.

The development also highlights the importance of creating a tax system that encourages compliance without placing excessive pressure on businesses and households. A predictable and transparent tax environment can help improve investor confidence while giving government a more sustainable source of revenue.

With tax collections reaching ₦27.1 trillion in seven months, the performance will likely strengthen the government’s focus on domestic revenue mobilisation for the remainder of the year.

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The Nigeria Civil Aviation Authority has directed Overland Airways to refund passengers who were wrongly charged Value Added Tax (VAT) on flight tickets purchased before January 1, 2026.

The directive followed clarification issued by the Nigeria Revenue Service regarding the implementation of the new tax regime affecting airline tickets.

Passengers had lodged complaints after reports emerged that some travellers, including an elderly woman, were compelled to pay VAT at airport counters in 2026 despite purchasing their tickets in 2025—before the new tax provisions took effect.

The Director of Public Affairs and Consumer Protection at the NCAA, Michael Achimugu, confirmed in a statement that the issue had been resolved following regulatory engagement with the airline and the tax authorities.

According to Achimugu, tickets purchased before January 1, 2026, were not subject to the new VAT rules and should not have attracted additional charges at check-in.

He explained that regulatory clarification became necessary after the airline implemented the VAT requirement based on its interpretation of the new fiscal policy.

Following the clarification from the Nigeria Revenue Service, Overland Airways agreed to correct the situation and initiate refunds for affected passengers.

The controversy had sparked concerns among travellers, particularly during the December peak travel period, as many described the additional VAT charges as unexpected and financially burdensome.

The NCAA’s intervention reinforces its consumer protection mandate and underscores the importance of proper regulatory guidance in implementing fiscal policy changes within Nigeria’s aviation sector.

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The Nigeria Revenue Service (NRS) has projected a record N40.7 trillion in tax revenue and royalties for 2026, a significant jump from the N28.23 trillion collected in 2025.

This projection reflects the impact of sweeping tax reforms aimed at consolidating revenue collection under the NRS and enhancing fiscal efficiency nationwide.

Executive Chairman of the NRS, Zach Adedeji, disclosed the figures during a roundtable in Abuja on Wednesday organized by the House of Representatives Committee on Appropriations for key stakeholders in the financial sector.

The meeting provided lawmakers an opportunity to review the agency’s 2025 performance and examine projected revenue for the new fiscal year.

Adedeji attributed the higher 2026 target to recent reforms transferring petroleum revenues, mineral royalties, and other federal collections to the NRS. “In light of these reforms, the total target is N40.7 trillion. We believe that with the support of the House, we will achieve this goal,” he said.

The 2025 fiscal year saw the NRS exceed expectations, collecting N28.23 trillion against a target of N25.2 trillion. This represented a 30.3 percent year-on-year growth compared to 2024, primarily driven by non-oil taxes. Adedeji emphasized that the reforms provide a more structured and efficient system for revenue mobilization, reducing the number of agencies involved in tax collection.

Backstory
The transformation stems from the Nigeria Revenue Service Establishment Act, 2025, which officially rebranded the Federal Inland Revenue Service (FIRS) into the NRS. The legislation, signed into law by President Bola Tinubu on June 26, 2025, consolidated federal tax administration under a single authority, limiting other agencies from collecting overlapping revenues. Taiwo Oyedele, Chairman of the Presidential Tax Committee, noted that the reforms were designed to allow about 60 federal agencies to focus on their core mandates rather than revenue collection.

This overhaul forms part of a broader strategy to modernize Nigeria’s tax administration and strengthen fiscal governance. By centralizing tax collection, the NRS aims to streamline compliance, reduce corruption, and provide a clear framework for accountability.

At the roundtable, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, highlighted the importance of the reforms in transitioning Nigeria from dependence on ad hoc financing, including the now-defunct subsidy system funded by the Nigerian National Petroleum Company Limited (NNPCL), to more sustainable, market-based fiscal mechanisms. “The reforms are intended to correct distortions, enhance transparency, and provide predictable revenue streams for national development,” Edun said.

Rep. Abubakar Bichi (APC–Kano), Chairman of the House Committee on Appropriations, emphasized the significance of legislative oversight in understanding the NRS’s projections. “This engagement allows us to study, consider, and approve the 2026 revenue targets. It is essential that Nigerians understand how these projections are derived and the impact of tax reforms on national finances,” he stated.

The reforms are expected to have far-reaching implications for Nigeria’s fiscal landscape. By consolidating petroleum royalties, mineral revenues, and other federal taxes under the NRS, the government aims to reduce leakage, enhance revenue predictability, and support economic growth initiatives. Analysts also suggest that this streamlined structure could encourage compliance among taxpayers by providing a clear and unified point of interaction for all federal taxes.

In addition to boosting revenue, the reforms align with Nigeria’s broader economic strategy of diversifying income sources beyond oil, promoting transparency, and enabling long-term fiscal sustainability. By increasing non-oil tax collections, the government can invest more effectively in infrastructure, healthcare, education, and other critical public services.

What You Should Know

• The NRS is now Nigeria’s central revenue authority, replacing FIRS.
• 2026 revenue target: N40.7 trillion, up from N28.23 trillion in 2025.
• Tax reforms transferred petroleum and mineral royalties to the NRS.
• Reforms aim to centralize tax collection, reduce agency overlap, and improve compliance.
• Fiscal strategy includes transitioning from subsidy-dependent financing to market-based solutions.

The NRS’s ambitious target reflects Nigeria’s ongoing efforts to modernize its tax system, enhance fiscal discipline, and promote inclusive economic growth through efficient revenue collection.

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Nigeria’s new tax law has introduced a major change that is already stirring confusion across offices, markets, and online spaces: mandatory annual tax returns for individuals, including low-income earners.

Since the law took effect in 2026, many Nigerians have been asking the same questions. If tax is already deducted from salary, why file again? Do small traders earning below ₦800,000 a year need to bother? And what happens if someone ignores it completely?

Experts say understanding the new requirements early could save Nigerians money, stress, and penalties.

What Is a Tax Return?

A tax return is a yearly declaration of income to the government. It shows how much money a person earned from salary, business, freelance work, rent, or other sources, and what deductions or reliefs apply.

Under the Nigeria Tax Administration Act, filing a return allows tax authorities to confirm whether a person has paid the correct tax, owes additional tax, or qualifies for a refund.

Who Must File Under the New Law?

Under the new framework, every individual with income must file a tax return, even if no tax is ultimately payable.

This includes:

• Salary earners under PAYE
• Freelancers and gig workers
• Small traders and artisans
• Business owners
• Landlords earning rental income

Employers are still required to file PAYE returns for staff by January 31 each year. However, individuals must file their personal tax returns by March 31, regardless of income level.

What About Low-Income Earners?

One key relief under the new tax law is that Nigerians earning ₦800,000 or less annually are exempt from paying personal income tax.

However, experts stress that such individuals must still file a nil return to confirm their exempt status. Failure to do so may result in being classified as non-compliant, which can create problems later when tax clearance is required.

Benefits Many Nigerians Are Missing

Tax experts say filing returns is not just about compliance; it also unlocks benefits.

Rent relief now allows individuals to deduct 20% of annual rent paid from taxable income, provided proper documentation is submitted. This can reduce the amount of tax deducted from salaries or even result in refunds.

Filing also enables access to a Tax Clearance Certificate, which is often required for:

• Bank loans
• Business registrations
• Government contracts
• Visa and official applications

For freelancers and workers with multiple income streams, filing accurately can prevent future disputes and audits.

Penalties Have Increased

The law also introduces stiffer penalties for non-compliance.

Missing the March 31 deadline attracts a ₦100,000 fine for the first month, followed by ₦50,000 for every additional month of delay. Under-declaring income can also lead to interest charges, audits, and enforcement actions.

With improved digital monitoring, including BVN-linked financial data and electronic invoicing, tax authorities now have stronger tools to detect undeclared income.

Challenges on the Ground

Despite the reforms, many Nigerians face real obstacles. Limited internet access, lack of digital skills, missing rent receipts, and difficulty obtaining a Tax Identification Number remain common problems.

Experts argue that tax authorities must increase public awareness, deploy help desks in markets and local councils, and simplify filing processes to ensure inclusion.

What Nigerians Should Do Now

Tax professionals advise Nigerians to start early. Gather payslips, rent documents, and records of side income. Visit state internal revenue portals or the Nigeria Revenue Service platform for guidance.

Those unsure of the process are encouraged to seek help from tax offices or licensed practitioners rather than waiting until deadlines approach.

A Shift Nigerians Must Adapt To

While concerns remain about how tax revenues are used, analysts say the new tax law reflects a shift toward broader compliance rather than higher tax rates.

Understanding and filing tax returns, they say, is no longer optional. It is now a key requirement for financial stability, access to opportunities, and long-term peace of mind.

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Nigeria has signed four new tax laws aimed at overhauling its tax system and boosting revenue from January 1, 2026. The Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service Act, and Joint Revenue Board Act replace over a dozen outdated statutes.

The reforms exempt individuals earning up to ₦800,000 annually from personal income tax and maintain VAT exemptions on food and education. Higher earners will face new progressive rates up to 25 per cent on incomes above ₦50 million, with global income, capital gains on assets including crypto, and non-cash benefits now taxable.

Small businesses with turnover below ₦100 million will pay no corporate tax or capital gains tax but must register with the Corporate Affairs Commission and use e-invoicing. Larger firms will keep paying 30 per cent corporate tax, with a possible cut to 25 per cent for key sectors. Multinationals face a 15 per cent minimum effective tax rate and new levies on undistributed offshore profits.

The government says the changes protect the poor while shifting the tax burden to wealthy individuals and big corporations. Critics warn of pressure on salaried workers, while supporters praise the simplified laws and green investment incentives. The Nigeria Revenue Service has urged taxpayers to prepare before the start date.

Source: Guardian

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A New Direction for Nigeria’s Tax System

The National Assembly has approved four key bills:

•Nigeria Tax Bill 2025

•Tax Administration Bill

•Nigeria Revenue Service (Establishment) Bill

•Joint Revenue Board (Establishment) Bill

These laws mark a shift from outdated tax systems to a modern, fair, and business-friendly model. The goal is to simplify tax collection, improve compliance, and promote fairness.

Senate Majority Leader Opeyemi Bamidele called the move “a departure from archaic systems that hinder growth.” He stressed the need for tax laws that benefit both citizens and businesses.

What’s Changing in VAT?

A major part of the reform is the new Value Added Tax (VAT) sharing formula:

•Federal Government: Reduced from 15% to 10%

•States: Increased to 55%

•Local Governments: Get 35%

The reforms also propose a 60% derivation formula to resolve past legal battles over VAT rights. In simple terms, states and LGAs would keep more of the VAT they generate.

Relief on Essential Goods

The new bills will exempt VAT on essential items like:

•Food

•Education

•Rent

•Healthcare

•Public transport

•Exports and other basic needs

This will help millions of Nigerians deal with rising inflation.

Tax-Free Thresholds and SME Benefits

The Nigeria Tax Bill 2025 merges existing federal tax laws into one clear document. It brings major changes:

•No income tax for people earning up to ₦800,000 yearly

•No company tax for small businesses with less than ₦50 million in revenue

•Development Levy of 4% replaces older taxes like TETFund, but does not apply to small businesses

•Capital gains will now be taxed like company income

More Technology, Better Oversight

The Tax Administration Bill introduces digital tools:

•E-filing

•E-invoicing

•Real-time data sharing

Taxes will be based on where goods and services are used, not where they’re sold. This ensures fairer revenue sharing.

The Federal Inland Revenue Service (FIRS) will become the Nigeria Revenue Service (NRS) with lower running costs. A new independent board and executive vice chairman will lead the agency.

Resolving Disputes Fairly

The Joint Revenue Board Bill will replace the Joint Tax Board. It will coordinate tax policy across the country. It introduces:

•A Tax Ombudsman to handle public complaints

•A stronger Tax Appeal Tribunal to resolve tax disputes

This is expected to reduce multiple taxation and improve public trust in the system.

How It Affects Everyday Nigerians

The reform is designed to help low- and middle-income earners:

•No PAYE tax for those earning less than ₦1 million per year

•Tax breaks for wage awards and transport subsidies

•Fewer levies and easier processes for small businesses

•Reduced paperwork for SMEs

•No stamp duty on rents below ₦10 million

According to Taiwo Oyedele, Chair of the Presidential Fiscal Policy and Tax Reforms Committee, this is “the first reform that truly benefits the average Nigerian.”

A Boost for Local Economies

The changes could bring down the cost of essential goods and promote local industries. Small businesses will save more, while states and LGAs will get better funding.

If properly implemented, the reforms could:

•Increase disposable income

•Encourage job creation

•Improve tax transparency

•Build a more inclusive economy

Final Thoughts

These reforms offer real hope. But their success depends on execution. Poor rollout could hurt the very people it aims to help. However, with proper planning and oversight, Nigeria could be on the path to lasting economic recovery.

All eyes now turn to President Tinubu, whose assent will mark a new chapter in Nigeria’s tax history.

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This shift would see the establishment of a single entity, the Nigeria Revenue Service, tasked with managing all revenue collection activities.

The proposed reform, part of a comprehensive tax reform package, would impact key agencies such as the Nigerian Customs Service, Nigerian Ports Authority, and over 60 other entities. These bodies would no longer handle revenue collection duties, which will instead be centralized under the new Nigeria Revenue Service. The initiative seeks to optimize tax collection and reduce inefficiencies across the board.

Streamlining Revenue Collection

The reforms were unveiled as the President transmitted four executive bills to the National Assembly, including the Nigeria Revenue Service (Establishment) Bill. This new law aims to rename the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service, marking a shift in how the government handles its financial inflows. The bill will remove the revenue collection arm from existing agencies, allowing them to focus on their core mandates such as trade facilitation.

According to a senior official at the Presidency, “This is not a merger. The new agency will be similar to revenue agencies in the US or UK, which collect all government revenues. Other agencies will focus on their core duties.”

Improving Nigeria’s Tax-to-GDP Ratio

One of the major goals of the proposed reforms is to increase Nigeria’s tax-to-GDP ratio, which is currently one of the lowest in the world, falling below the African average. By implementing the Nigeria Revenue Service, the government aims to hit a minimum tax-to-GDP ratio of 18%, reducing the country’s reliance on borrowing and addressing the persistent fiscal deficit.

In addition to the name change, three other tax reform bills were submitted, including the Joint Revenue Board (Establishment) Bill, which seeks to create a Tax Tribunal and a Tax Ombudsman to handle disputes related to tax administration.

Reactions to the Proposal

The plan has elicited mixed reactions from various stakeholders. Dr. Eugene Nweke, former National President of the National Association of Government Approved Freight Forwarders, criticized the proposal, arguing that customs globally are responsible for both revenue collection and anti-smuggling operations. He warned that outsourcing this function could lead to inefficiencies.

Similarly, Taiwo Fatobilola, National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria, expressed doubts about the feasibility of the plan, questioning the government’s capacity to train new personnel for revenue collection.

However, supporters of the reform believe it will enhance transparency and improve Nigeria’s overall fiscal health, fostering investment and boosting economic growth. President Tinubu has emphasized that the bills, when passed, will create a more efficient, taxpayer-friendly system, driving both compliance and economic development.

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