Nigeria’s 2026 Tax Reform: Firms to Receive 5% Annual Tax Credit Under New Simplified Regime
Nigeria’s tax landscape is set for a major transformation as the federal government unveils a new tax regime effective January 1, 2026, offering multinational and local companies a five-percent annual tax credit. According to Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reform Committee, the policy aims to simplify the system, broaden the tax base, and promote economic growth without stifling enterprise. The framework introduces tax incentives for investments in priority sectors, higher exemption thresholds for local and multinational firms, and the option to remit foreign-currency-based taxes in naira at the official exchange rate.
At the heart of the reform is a bid to create a fairer and more transparent fiscal system that rewards compliance and encourages investment. Corporate tax rates for larger firms are expected to drop from 30 percent to 25 percent, while small businesses with turnover below ₦100 million and assets under ₦250 million will be fully exempted from corporate tax. Oyedele described the initiative as a turning point in Nigeria’s economic history, emphasizing that taxation must be viewed as a “social contract” — one that strengthens trust between citizens and the state through transparency and accountability.
Industry stakeholders have welcomed the move but caution that execution will determine success. The Association of Small Business Owners of Nigeria (ASBON) praised the tax credit and small-business exemptions but criticized limited stakeholder engagement. ASBON president Dr Femi Egbesola urged government to eliminate multiple and informal levies at the local level, warning that excessive taxation still threatens SMEs. He called for simplified compliance procedures and a more inclusive policy process to ensure that small enterprises can thrive under the new system.
The reforms have also received backing from the Centre for the Promotion of Private Enterprise (CPPE) and the Civil Society Legislative Advocacy Centre (CISLAC). CPPE chairman Dr Muda Yusuf lauded the reduction of redundant levies and the expanded personal income tax threshold that exempts low-income earners from PAYE, saying it would ease household burdens and stimulate production. CISLAC’s executive director Auwal Musa Rafsanjani, however, stressed that success depends on transparency and effective use of public funds. He warned that corruption, weak enforcement, and overlapping tax agencies could derail the reform’s objectives.
Experts agree that the 2026 Tax Reform Act could reshape Nigeria’s fiscal structure, strengthen compliance, and attract new investment — but only if trust is rebuilt between government and taxpayers. With MSMEs contributing over 48 percent of GDP and employing more than 80 percent of the workforce, policy consistency and fiscal discipline will be critical. As Oyedele summed up, “Taxation is a shared responsibility — a social contract that only works when both government and citizens hold up their ends of the bargain.”
source: Leadership