In a decisive move to modernise Nigeria’s tax architecture, President Bola Ahmed Tinubu has signed the Nigeria Tax Administration Act (NTAA) 2025 into law—marking a significant milestone in the country’s fiscal reform agenda. The legislation, a key recommendation from the Presidential Fiscal Policy and Tax Reforms Committee, aims to simplify tax administration, promote voluntary compliance, and expand the tax base without undermining economic productivity.

Described by tax professionals as a structural reset, the NTAA introduces a unified, tech-driven framework to streamline processes, incentivise compliance, and embed global standards in Nigeria’s domestic tax system.

Modern Governance Through Unified Tax Oversight

A cornerstone of the Act is the establishment of a harmonised tax administration structure. The Nigeria Revenue Service (NRS) is designated as the central agency for overseeing federal corporate taxation, non-resident entities, and specific public sector contributions, while state tax authorities retain jurisdiction over personal income and related levies.

This restructuring facilitates improved inter-agency coordination, introduces shared audit protocols, and mandates statutory response timelines—measures designed to reduce duplication, improve service delivery, and enhance trust in public institutions.

Widening the Net, Not the Burden

With less than 10% of Nigeria’s adult population currently captured in the tax system, the NTAA introduces simplified return mechanisms for small businesses and low-income earners, easing entry into the formal tax space. Crucially, the Act mandates identification protocols and penalty frameworks to improve compliance while avoiding punitive overreach.

In a major regulatory shift, Virtual Asset Service Providers (VASPs)—including those offering cryptocurrency services—must now meet Know Your Customer (KYC) obligations, report digital transactions, and remit defined tax liabilities. Non-compliance may attract fines of up to ₦10 million in the first month and ₦1 million for each additional month of default.

Driving Digital Transformation in Tax Administration

The NTAA 2025 places digital infrastructure at the heart of Nigeria’s fiscal future. It mandates the adoption of electronic fiscal systems (EFS) for issuing invoices and transmitting tax data. This move to a fiscalised VAT environment is designed to curb leakages, reduce fraud, and accelerate processing timelines.

Failure to comply with EFS mandates will trigger escalating penalties, signalling a shift from discretion to enforceable accountability. Analysts, including KPMG, have welcomed the reform as a game-changer for tax transparency, accuracy, and efficiency.

Taxing Fairly, Not Just More

The Act also revises several key fiscal instruments to enhance equity and economic inclusion. Among the notable provisions:

Progressive Personal Income Tax (PIT): Individuals earning below ₦800,000 annually are now PIT-exempt, while upper-income earners face rates of up to 25%. Severance compensation exemptions have been raised from ₦10 million to ₦50 million.
Development Levy: A consolidated 4% levy on large and medium-sized companies will replace several overlapping levies (e.g., TETFund, NASENI), reducing administrative burdens.
Capital Gains Tax (CGT): CGT on corporate disposals rises from 10% to 30%, aligning with Company Income Tax (CIT) to eliminate arbitrage.
Economic Development Incentive (EDI): Replacing the Pioneer Status Incentive, the EDI provides a 5% annual tax credit for qualifying capital expenditures over five years.

“These are not just fiscal measures—they reflect a deliberate strategy to rebalance the tax burden and stimulate investment in strategic sectors,” said Innocent Ohagwa, President of the Chartered Institute of Taxation of Nigeria (CITN).

Boosting Accountability with a Taxpayer-Centric Approach

To build trust and reduce friction, the NTAA establishes the Tax Ombudsman’s Office—a neutral channel to resolve disputes, investigate taxpayer grievances, and ensure equitable treatment. It also codifies rights to timely refunds, transparent assessments, and standardised objection procedures.

All validated refund claims must now be processed within 90 days, enhancing credibility in the tax system and reducing litigation.

Implementation: The Crucial Next Step

While the NTAA 2025 has drawn praise for its ambition and clarity, its ultimate success will depend on robust implementation. The CITN has committed to supporting capacity building, professional advisory services, and public sensitisation efforts to ensure a smooth transition.

“There will be initial adjustment pressures, especially for SMEs,” Ohagwa acknowledged, “but with effective execution, the Act has the potential to redefine Nigeria’s fiscal landscape and foster a more accountable, inclusive economy.”

The NTAA represents more than a legislative overhaul—it signals a renewed social contract between government and citizens. As Nigeria seeks to enhance domestic revenue mobilisation in a post-oil economy, the Act lays a foundation for sustainable growth, institutional credibility, and shared prosperity.