Nigeria’s New Tax Regime Begins as NRS Replaces FIRS

Nigeria’s new tax regime officially commenced today with the transition of the Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service (NRS), marking a major shift in the country’s revenue administration framework.

The new system is designed to boost revenue mobilisation and raise Nigeria’s tax-to-GDP ratio to 18 per cent over the next three years, from the current level of about 13.5 per cent—one of the lowest among peer economies in Africa.

Ahead of the formal take-off, the NRS on Wednesday unveiled its institutional brand identity in Abuja, signalling the start of a new era in tax administration. The agency said a key priority under the new regime is securing public trust and stakeholder buy-in, especially in response to widespread misinformation surrounding the implementation of the new tax law.

To address this, the Presidential Fiscal Policy and Tax Reform Committee is collaborating with the National Orientation Agency (NOA) to roll out digital explainers and translate the new tax law into major Nigerian languages, ensuring grassroots understanding and inclusion from the outset.

The NRS said it will undertake extensive consultations with a broad range of stakeholders, including traders, women, youths, students, persons with disabilities, diaspora Nigerians, business leaders, multinational companies, SMEs in the informal sector, fintech firms, professional bodies, tax practitioners, legal and accounting firms, and operators across sectors such as telecommunications, real estate, transport, hospitality, oil and gas, and utilities.

The consultations, which began earlier in the year, are continuing as the implementation phase of the new tax regime gets underway.

New corporate identity, expanded mandate

The NRS came into existence following the signing of the Nigeria Revenue Service (Establishment) Act, 2025, into law by President Bola Tinubu in June 2025. Speaking at the unveiling of the agency’s logo, the Executive Chairman of NRS, Zacch Adedeji, said the new identity represents a milestone in the evolution of Nigeria’s revenue administration.

According to a statement by his Special Adviser on Media, Dare Adekanmbi, Adedeji said the rebranding reflects a renewed commitment to a unified, efficient, and service-oriented revenue system aligned with Nigeria’s economic transformation agenda and global best practices.

“The new identity signals continuity of purpose, strengthened institutional capacity, and a forward-looking approach to supporting taxpayers and national development,” he said, adding that the NRS remains committed to transparency, partnership, and service excellence.

Under the new tax regime, the NRS functions as the centralised agency for tax administration in Nigeria, with responsibility for assessing, collecting, and accounting for all federal tax revenues and select non-tax revenues accruing to the government of the federation.

Unlike the FIRS, which focused primarily on federal taxes, the NRS has an expanded mandate aimed at streamlining revenue collection, eliminating duplication, and reducing the number of revenue-collecting agencies at the federal level. It operates as an autonomous corporate body overseen by a governing board, chaired by an Executive Chairman who serves as chief executive.

Its core functions include administering major tax laws such as Corporate Income Tax and Value Added Tax, maintaining a centralised taxpayer database and issuing Taxpayer Identification Numbers (TINs) at no cost, providing taxpayer education and digital services, and enforcing compliance, including prosecuting tax defaulters.

Objectives of the reform

The tax reform that ushered in the new regime seeks to create a simpler, more transparent, and technology-driven tax system. Key objectives include harmonising multiple taxes and levies into fewer, broad-based taxes; unifying revenue collection functions; modernising tax administration through digital integration; leveraging data to curb evasion and aggressive tax avoidance; removing tax provisions that hinder investment and growth; and improving coordination across government agencies and tiers of government.

Other goals include enhancing efficiency and transparency in revenue reporting, ensuring better utilisation of tax revenues for social development, strengthening citizens’ tax morale, promoting voluntary compliance, and achieving a sustainable tax-to-GDP ratio of at least 18 per cent.

The NRS is also expected to work with local and international partners, including the World Bank, International Monetary Fund, United Nations, BudgIT, and the Tax Justice and Governance Platform.

Guiding principles and public reassurance

The Presidential Fiscal Policy and Tax Reform Committee said the reform process is guided by national interest, evidence-based decision-making, and global best practices adapted to local realities. It emphasised that the philosophy underpinning the reform is to “let everyone breathe,” stressing that the government does not intend to tax poverty but to promote prosperity and tax returns, income, and consumption rather than investment or production.

Speaking on public concerns, the Committee’s Chairman, Dr Taiwo Oyedele, dismissed claims that the government plans to debit citizens’ bank accounts directly as false and dangerous. He clarified that no government agency has the power to remove funds from bank accounts without due judicial process, noting that tax recovery can only occur through a court-ordered garnishee.

Oyedele also debunked fears about widespread transaction reporting, explaining that existing laws already require business accounts to have TINs and that the new reform has raised reporting thresholds, ensuring that the vast majority of Nigerians are unaffected.

He warned that misinformation could trigger unnecessary panic and economic disruption, stressing that the reform is intended to simplify compliance, reduce double taxation, expand the tax net, and support economic recovery.

According to Oyedele, tax reform is ultimately about rebuilding trust between citizens and the state. “At its core, it is about fairness, transparency, and accountability in how public resources are raised and used,” he said, calling on the media to play a critical role in educating the public and countering misinformation.