President Bola Tinubu’s recent endorsement of comprehensive tax reforms signals a significant shift in Nigeria’s economic direction, particularly for the tech industry. Spearheaded by the Presidential Fiscal Policy and Tax Reforms Committee, the new laws—enacted on June 26, 2025—are designed to simplify the country’s previously burdensome tax structure. According to committee chairman Taiwo Oyedele, these reforms aim to ease the operational challenges businesses face, especially within the technology and telecommunications sectors, by reducing overlapping taxes and fostering a more investment-friendly environment.
The reform package includes four pivotal laws: the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA). These laws modernize Nigeria’s tax system, encourage compliance, and broaden the tax base. Key benefits for the ICT sector include tax exemptions for individuals earning under ₦800,000 and small businesses with annual revenue below ₦100 million. These changes are particularly helpful for early-career tech workers and small-scale startups such as software firms and cybersecurity consultancies.
Additionally, ICT firms can now recover input VAT on all expenses, which will lower operational costs for businesses investing in infrastructure. A 5% annual tax credit on qualifying capital expenditure over five years under the new Economic Development Incentive (EDI) also presents a major advantage for data centers and cloud infrastructure companies. The reforms could, over time, enhance broadband quality, reduce service prices, and support digital expansion.
However, the reforms also bring new compliance complexities. Professionals in IT consulting and software services are excluded from small business incentives, a decision criticized by industry insiders. Mandatory monthly PAYE filings, electronic invoicing, and TIN registrations add administrative burdens for small firms. Cybersecurity experts warn that although digital compliance is emphasized, there’s a lack of corresponding cybersecurity measures—raising concerns about exposing the system to cyber threats amid Nigeria’s rising profile in global cyberattack rankings.
Reactions from the industry are cautiously optimistic. The Association of Licensed Telecommunications Operators of Nigeria (ALTON) praised the shift toward central tax collection, which could eliminate duplicative state-level charges. Still, they stressed that successful implementation is key. Without effective execution, these reforms may fall short of expectations. As the nation navigates this transition, stakeholders await tangible results in the form of economic stimulation, improved ICT infrastructure, and a more predictable tax landscape.
Source: The sun