Nigeria: Oyedele leads six-week review of Nigeria’s tax reforms

The Federal Government has commenced a six-week review of Nigeria’s tax reforms to identify and address implementation gaps, ambiguities and unintended consequences that have emerged since the new tax laws came into force in January 2026.

The review will examine key areas of the tax system, including Value Added Tax (VAT) thresholds, withholding tax, capital gains treatment and multiple taxation. Its recommendations are expected to inform the Finance Bill 2027.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this in Abuja on Thursday while inaugurating the Technical Subcommittee on Fiscal Policy and Tax Reforms.

Oyedele, who also chairs the Presidential Fiscal Policy and Tax Reforms Committee, said implementation of the new legislation had highlighted areas requiring clarification, refinement and further policy intervention.

“The real test begins when the law meets the economy, as businesses interpret it, administrators implement it, investors respond to it, and citizens experience it. Implementation inevitably reveals areas requiring clarification, refinement or further reform,” he said.

The Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025, Nigeria Revenue Service (Establishment) Act 2025 and Joint Revenue Board (Establishment) Act 2025 became fully effective on January 1, 2026.

Government shifts from tax restructuring to continuous reform

Oyedele said the government was moving from fundamental restructuring of the tax system towards continuous improvement.

He stressed that the latest review was not intended to reverse the reforms enacted in 2025, but to address practical issues that have become apparent during implementation.

“The Finance Bill 2027 should not be seen as just another annual legislative exercise. Our task is not to rewrite the 2025 reforms, but to preserve their fundamental principles while learning from implementation and responding to new economic realities,” he said.

He added that the review would examine areas where implementation had exposed ambiguity or unintended consequences, as well as opportunities to simplify compliance and improve investment and competitiveness.

The exercise will also extend beyond taxation to broader fiscal policy and management, public financial management, debt, transparency, capital markets and cross-border capital flows.

According to Oyedele, the government received 134 submissions from across Nigeria’s geopolitical zones following its call for public input, alongside additional submissions received in hard copy.

Preliminary concerns raised by stakeholders include calls for clearer and simpler provisions around VAT thresholds, withholding tax and capital gains treatment.

Stakeholders also called for stronger measures against multiple taxation and improved coordination among revenue authorities. Greater digitalisation and data sharing were proposed to reduce the need for taxpayers to repeatedly provide information already available to government agencies.

Other proposals focused on strengthening taxpayer rights, accelerating tax refunds and providing safeguards for small businesses.

Stakeholders also identified opportunities to improve investment and competitiveness in sectors including mining, renewable energy, healthcare and capital markets.

Review to assess wider economic impact

Oyedele urged members of the technical subcommittee to consider how proposed changes would affect households, workers and businesses, particularly low-income groups.

“Every tax reform produces winners and losers; the question is whether a policy is fair, efficient and competitive, not whether it is popular with everyone,” he said.

The minister warned that measures designed to increase government revenue could impose larger costs on the wider economy if they discourage investment or productive activity.

“A provision that raises revenue may impose a far greater cost on the wider economy. The government must optimise the whole economy, not merely achieve a single objective,” he said.

He also identified complexity as a significant cost to taxpayers and businesses.

“Complexity is itself a tax; it raises compliance costs and creates room for discretion and arbitrage. Where two approaches achieve the same outcome, choose the simpler one,” Oyedele said.

Withholding tax rules to be reviewed

In addition to preparing recommendations for the Finance Bill 2027, the subcommittee has been mandated to review the Deduction of Tax at Source Regulations 2024 and develop revised withholding tax regulations.

It will also review the Companies Income Tax (Significant Economic Presence) Order 2020 and develop an updated framework aligned with the new tax laws and international practices.

Oyedele said withholding tax should continue to serve as an advance-payment and compliance mechanism rather than become an additional business cost or a tax on working capital.

He said the issue was particularly significant given Nigeria’s high financing costs, warning that prolonged withholding of funds could constrain companies’ ability to expand.

“In a country where the cost of capital is very high, if you withhold the funds that businesses should use for expansion for even one year, it comes at a huge cost,” he said.

Broad stakeholder representation

The technical subcommittee has been given six weeks to complete its assignment and submit its report.

The Permanent Secretary of the Federal Ministry of Finance chairs the subcommittee, while Albert Folorunsho, Chairman of the Tax Advisory Committee, serves as co-chair.

Membership includes representatives of the Federal Ministry of Justice, Nigeria Revenue Service, Joint Revenue Board, Nigeria Customs Service, Central Bank of Nigeria, Debt Management Office, Budget Office of the Federation and Nigerian Investment Promotion Commission.

Other members represent the Small and Medium Enterprises Development Agency of Nigeria, Manufacturers Association of Nigeria, Nigerian Economic Summit Group, Nigerian Bar Association, Association of National Accountants of Nigeria, Chartered Institute of Taxation of Nigeria and Institute of Chartered Accountants of Nigeria.

Representatives of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture and the Big Four accounting firms — Deloitte, EY, KPMG and PwC — are also part of the committee.

Folorunsho said the panel would focus on developing recommendations that reflect the practical realities facing taxpayers, businesses and government.

“Our recommendations must therefore be technically sound, administratively practicable, and responsive to the realities confronting taxpayers, businesses, and government,” he said.

Despite the six-week timeline, Folorunsho said the committee would consult relevant stakeholders and pursue measures capable of strengthening revenue mobilisation without creating unnecessary burdens for taxpayers.