Explainer: What you need to know about Nigeria Tax Reform Bill 2024

The Nigeria Tax Reform Bill 2024 is poised to transform the nation’s tax landscape, making it smarter, fairer, and more efficient. This bold initiative promises to simplify tax processes, boost revenue, and attract investments. Here’s what you need to know:

Why the Reform Matters

Nigeria’s outdated tax system is being reimagined with four key goals in mind:

Simplification: Streamlining tax laws for consistency and ease.
Compliance: Making it easier for individuals and businesses to pay their taxes.
Revenue Growth: Ensuring government coffers are healthy enough to fund development.
Investment Appeal: Reducing red tape to attract local and foreign investors.

What’s Changing?

The bill doesn’t just tweak a few policies—it introduces sweeping changes to how taxes are administered:

A New Tax Authority

The Nigeria Revenue Service (NRS): Replacing the Federal Inland Revenue Service, this revamped agency will manage taxes across sectors, with tech-driven tools for assessments and payments.
Joint Revenue Board (JRB): A coordination hub ensuring federal, state, and local tax policies work seamlessly together.

Easier Tax Disputes

Tax Appeal Tribunal & Ombudsman: Providing fair and transparent resolution channels for tax disagreements while safeguarding taxpayer rights.

Who’s Paying What?

Corporate Taxes

Large companies: 27.5% (2025), dropping to 25% (2026).
Small businesses: Exempt if turnover is under ₦25 million.

Value Added Tax (VAT)

Gradual increases from 7.5% in 2024 to 15% by 2030, with key exemptions for baby products, medicines, and electricity.

Sector-Specific Taxes

Oil and Gas: New hydrocarbon taxes and royalty transparency requirements.
Digital Economy: Taxes on profits from tech services, e-commerce, and online ads offered by foreign companies.

Innovations in Tax Compliance

The reform introduces tech-savvy solutions to make compliance simpler:

Taxpayer Identification Number (TIN): Mandatory for everyone, linked to a national database.
Electronic Fiscal Systems (EFS): Real-time tracking of VAT, excise duties, and other taxes to curb evasion.
Self-Assessment: Encourages voluntary income declarations, reducing audit pressure.

Sweeteners for Businesses

Tax incentives for priority sectors like agriculture, manufacturing, and renewable energy.
Relief from double taxation through international agreements.
Startups enjoy tax holidays and reduced rates to spur growth.

What Happens If You Don’t Comply?

Crackdowns on fake transactions and hidden offshore incomes.
Hefty fines for late filings, non-remittance of VAT, and withholding taxes.

Where Will the Money Go?

Infrastructure and Education: Funds will be channeled into critical projects.
Transparency: Regular audits and public disclosure to ensure accountability.

Digital and Petroleum Economies in Focus

Petroleum firms must report royalties monthly, with eco-friendly incentives for upstream operators.
Digital services like e-commerce and online ads offered by foreign companies will now contribute to Nigeria’s tax revenue.

The Big Picture

The Nigeria Tax Reform Bill 2024 aims to: