In a historic move to revamp the fiscal system in Nigeria, Alhaji Bola Tinubu signed four bills regarding tax reform into law on June 26, 2025. These bills, namely the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA),
Nigeria Revenue Service Establishment Act (NRSEA) and Joint Board of Revenue Establishment Act (JRBEA). Even as Nigeria approaches the implementation phase, these tax reform bills have become the subject of strong discussion, with reports of changes since the law was passed.
While most public discussion and analysis has focused on title characteristics, several important areas that may result in unintended consequences or untapped opportunities for better tax implementation have been significantly less examined, and in the following sections, I highlight some of these dimensions and their potential implications.
The informal sector and its treatment: The informal economy is responsible for employing over 90% of Nigeria's workforce, which includes market vendors, artisans and small-scale business operators who may have incomplete accounts or limited tax knowledge. The estimated tax provision will cater to this group needing to pay taxes based on their estimated income, thus bringing them into the tax net. An important consideration in this aspect is the possibility of enforcement action against this group, which may force them to operate on a hidden or underground economy, when there is a lack of adequate education and simplified systems for easy tax compliance for this group, who are largely dependent on undocumented systems or very rudimentary cash income. While this relaxation is very welcome for small-scale business operators (turnover less than NGN 100 million per annum), much remains to be done for this group, who operate cash-based businesses and may even be unregistered, otherwise it could potentially lead to increased theft.
Implications for fiscal federalism and state autonomy: With changes in VAT sharing, the federal share is reduced while the share of states and local governments increases, with sub-allocation based on equality (50%), population (20%), and consumption (30%). This leads to etymological theories that favor consumption-heavy areas, coincidentally, the southern states. This makes the right economic decision, but given how polarized the Nigerian political environment is, it could worsen regional tensions, citing in this case the unfair treatment of under-represented northern states.
Digital Economy and Taxation on Remote Workers: Among other factors, the increase in internet adoption has created a lot of opportunities for Nigerian youth.
The act taxes residents on worldwide income, including foreign-earned digital services, freelancing and remote work. Nigeria partners with over 100 countries for data exchange, and these earnings will be easy to track. This affects millions of freelancers or remote workers at foreign firms on platforms like Upwork, many of whom were not already tax exempt. In some cases, issues like double taxation may arise, then compliance burden (self-assessment, official exchange rates), enforcement feasibility etc. If these workers feel that taxes are unfair, they may reduce work hours, which, in turn, may deter talent retention or promote informal reporting, especially without strong support for digital nomads.
Environmental and energy implications of fossil fuel surcharge: 5% surcharge on fossil fuel products like petrol and diesel will help incentivize clean fuels with exemption to LPG, CNG and alternative fuels.
For a country highly dependent on oil, there will be a consequent increase in the cost of living, including an increase in fuel pump price, up to an additional ₦45-₦50 per litre, a real cost to households and businesses, given the epileptic power supply and drive for generators.
Revenue uses are not earmarked for spending on green projects, and they prioritize fiscal needs above environmental goals. Behavioral changes in switching to clean fuels and inflationary transfers are relatively poorly understood areas.
Gender issues and women's occupations
The informal sector is dominated by women as traders and small enterprise owners, many of whom face significant barriers to accessing formal financing and credit.
While the tax reforms' relaxation for companies will provide relief to many women-owned SMEs, the law lacks targeted, gender-specific measures to address the unique challenges faced by women entrepreneurs. Another concern is the complete absence of recognition or provisions for unpaid care work. A significant portion of Nigerian women serve as housewives, stay-at-home parents, or primary caregivers, roles that provide essential but uncompensated contributions to household and social well-being. The tax system does not provide any kind of financial sanction, credit or relief for this labour, ignoring the opportunity to promote greater gender equality through deductions, allowances or other compensatory measures.
