Some key takeaways:
For Individuals:
Income Tax Exemption: Workers earning an annual income of ₦800,000 or less are fully exempt from personal income tax (PAYE).
VAT Relief on Essentials: Essential goods and services such as food, medical services, pharmaceuticals, school fees, and electricity generation/transmission are zero-rated for VAT, reducing the cost of living for low-income households.
Progressive Taxation: A more progressive personal income tax structure means high-income earners (above ₦50 million annually) are subject to a higher rate of 25%, ensuring a fairer contribution to the national revenue.
Rent Relief: A new 20% rent deduction (capped at ₦500,000) is available to ease housing costs for employees.
For Businesses:
Small Business Exemption: Small businesses with an annual turnover of ₦50 million or less are exempt from Companies Income Tax (CIT), VAT, and withholding tax, fostering entrepreneurship and formalization.
Corporate Tax Cut: For medium and large companies, the corporate tax rate will be reduced from 30% to 25% starting in 2026 to encourage investment and job creation.
Elimination of Nuisance Taxes: Over 50 nuisance taxes and levies have been eliminated, and tax collection is unified under the new Nigeria Revenue Service (NRS) to reduce the administrative burden and red tape on businesses.
Investment Incentives: Tax credits for VAT paid on capital expenditures and the introduction of Economic Development Tax Incentives (EDTI) for priority sectors (e.g., manufacturing, mining) are designed to attract investment and stimulate growth.
System-wide and Governance Improvements
Streamlined Administration: The creation of the Nigeria Revenue Service (NRS) replaces multiple agencies for a unified and efficient tax collection system.
Transparency and Fairness: The establishment of an Office of the Tax Ombudsman and a Tax Appeal Tribunal aims to resolve taxpayer disputes quickly and fairly (within 14 days in some cases).
Increased State Revenue: A revised VAT sharing formula gives states a larger share of the revenue (55% to states, 35% to local governments, 10% to Federal Government), encouraging fiscal autonomy and internal revenue generation.
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