Daniel Otera
President Bola Ahmed Tinubu has signed into law four major tax reform bills, marking a significant shift in Nigeria’s fiscal policy direction.
While the move is being hailed as a step towards modernising the country’s revenue architecture, a deeper look into the legislative changes raises critical questions about their likely impact on the nation’s economic realities, business climate, and governance structures.
The bills, signed into law at the Aso Rock Presidential Villa at 3:20pm on Thursday, include the Nigeria Tax Bill (Ease of Doing Business), the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. Each of these legislations introduces new frameworks aimed at improving revenue collection, reducing the multiplicity of taxes, and enhancing coordination across federal, state, and local tax authorities.
The presidential assent was witnessed by key members of the legislative and executive arms, including the Senate President, Speaker of the House of Representatives, and several governors and ministers. Though the event was ceremonial, the legislative implications are far-reaching.
A review of the bills suggests a policy shift towards unification, automation, and oversight:
Nigeria Tax Bill (Ease of Doing Business): This bill consolidates fragmented tax laws into a single harmonised legal framework.
According to previous government statements, its objective is to reduce tax duplication, ease compliance, and provide a predictable fiscal environment, factors that typically rank low for Nigeria in global business climate indexes.
Nigeria Tax Administration Bill: This law creates a standardised legal and operational structure for tax administration across all levels of government. While such uniformity may improve accountability, its implementation across 774 local government areas with different administrative capacities remains a looming challenge.
Nigeria Revenue Service (Establishment) Bill: Replacing the Federal Inland Revenue Service Act, this bill establishes the Nigeria Revenue Service (NRS) as a more autonomous and performance-focused agency. The new body is empowered not only to collect taxes but also non-tax revenues, an expansion that reflects the federal government’s ongoing effort to broaden the national revenue base.
Joint Revenue Board (Establishment) Bill: This bill formalises inter-governmental coordination on tax issues. It includes provisions for a Tax Appeal Tribunal and an Office of the Tax Ombudsman, potentially offering recourse for aggrieved taxpayers and boosting transparency.
While the newly signed tax reforms are aimed at improving Nigeria’s fiscal efficiency and boosting non-oil revenues, the country’s historical tax performance raises significant concerns. As of 2023, Nigeria’s total tax-to-GDP ratio stood at approximately 10.8%, one of the lowest globally and well below the African average of 16%, according to data from the Federal Ministry of Finance and the National Bureau of Statistics (NBS).
Despite successive Finance Acts and reforms introduced in recent years, the country has struggled to widen its tax base. Over 80% of tax revenues are still derived from oil-related sources, while non-oil sectors particularly the vast informal economy, which accounts for over 60% of Nigeria’s GDP remain largely untaxed.
These structural imbalances suggest that while administrative reforms are essential, they may not be sufficient in isolation to achieve sustained revenue growth without a broader economic restructuring.
One anticipated benefit of Nigeria’s ongoing tax reforms is the simplification of the country’s notoriously complex tax structure, a challenge that small and medium enterprises (SMEs) have long complained about.
According to the World Bank’s Doing Business 2020 report, Nigeria ranked 159th out of 190 countries in terms of ease of paying taxes, a position that highlighted the bureaucratic hurdles and high compliance costs many businesses face. If fully implemented, the new legislation promises to consolidate existing tax laws, harmonise levies, and reduce administrative burdens.
For state governments, particularly those heavily reliant on federal allocations, the introduction of the Joint Revenue Board is expected to promote greater accountability and uniformity in tax practices. However, questions remain about the ability of states with weak institutional frameworks to comply effectively, especially in the absence of strong fiscal discipline and political will.
The establishment of an independent Nigeria Revenue Service and accompanying ombudsman office may indicate a shift towards greater oversight and professionalisation. However, autonomy can be a double-edged sword if not matched with public transparency, data disclosure, and independent monitoring mechanisms. Nigeria has long battled with systemic revenue leakages, opaque budget processes, and inefficient bureaucracy.
According to the International Budget Partnership’s Open Budget Survey 2021, Nigeria scored 45 out of 100 on budget transparency, falling below the global average of 50. This rating places the country among nations with limited public access to budget information, weak legislative oversight, and inadequate public participation in the budget process.
Against this backdrop, the recent signing of four tax reform bills by President Bola Tinubu signals a formal attempt to overhaul Nigeria’s fiscal framework and modernise revenue generation. The bills passed by the National Assembly in May 2025 include changes to VAT structure, oil sector taxation, and the creation of a unified Nigeria Revenue Service.
Yet, experts warn that legislation alone is not enough. Nigeria’s fiscal history is littered with reforms that failed at the implementation stage due to lack of political will, poor monitoring, and entrenched elite interests.
In the words of fiscal policy analyst Taiwo Oyedele, “Without strong institutions and citizen engagement, reforms risk becoming paper tigers.”
In a country where budget credibility and service delivery remain fragile, many Nigerians are watching not just for laws on paper, but for reforms that translate into visible, measurable improvements, better roads, working schools, and functioning hospitals.
Its success will depend on three pillars: political will to confront vested interests, institutional discipline to enforce compliance, and public vigilance