In a significant shift, Nigerian workers earning the new minimum wage or slightly above will be exempt from pay-as-you-earn (PAYE) tax, as part of proposed reforms announced by Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms. Under the new policies, Nigerians earning under N1.7 million per month will see lower PAYE taxes, while high-income earners will face an increase, with rates climbing up to 25% for the top earners. These changes, alongside VAT exemptions on essentials like food and healthcare, aim to ease living costs and avoid penalizing low-income households.
For businesses, the reforms will address Nigeria’s complex tax structure by reducing the corporate income tax rate from 30% to 25% over two years and merging earmarked taxes into a single levy. Additional changes include eliminating minimum taxes on struggling businesses, allowing VAT credits to lower investment costs, and raising the corporate tax exemption threshold to N50 million in turnover. An ombudsman office will be created to protect taxpayers from administrative excesses, while tax incentives will be streamlined to offer equal opportunities for all investors.
The reform process involved extensive consultations, with input from government bodies, private sector representatives, students, and citizens across all states. Focus groups also ensured the reforms addressed diverse perspectives, including people with disabilities and Nigerians abroad. Oyedele noted that further measures, including new withholding tax regulations and national fiscal policy changes, are underway to modernize and harmonize Nigeria’s tax system.
