On June 26, 2025, President Bola Ahmed Tinubu made history by signing into law four comprehensive tax reform bills that promise to transform Nigeria's revenue generation landscape fundamentally. The Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service Act (NRSA), and the Joint Revenue Board Act (JRBA), collectively referred to as "the Acts," represent the most significant overhaul of Nigeria's tax system in decades.
These new Tax Acts introduce sweeping changes designed to drive economic growth, increase revenue generation, improve the business environment, and enhance effective tax administration across different levels of government. The reforms represent a fundamental shift from multiple, fragmented tax laws to a single, consolidated framework that eliminates overlapping, conflicting, or ambiguous provisions while streamlining Nigeria's tax system.
Enhanced Revenue Generation and International Compliance
The Nigeria Tax Act, 2025, significantly broadens what constitutes taxable income, explicitly bringing digital assets, virtual currencies, prizes, winnings, honoraria, grants, and awards into the tax net. The Act also captures foreign exchange differences from securities and derivative transactions under an expanded definition of "interest," ensuring comprehensive coverage of modern financial instruments.
To strengthen revenue generation, the Act introduces a new 4% Development Levy on assessable profits, which consolidates previously separate levies including the Tertiary Education Tax, Information Technology Levy, National Agency for Science and Engineering Infrastructure (NASENI) levy, and Police Trust Fund levy. This consolidation improves collection efficiency while ensuring dedicated funding for critical national development priorities.
The reforms align Nigeria with international tax standards by implementing a minimum effective tax rate of 15% for large companies with turnover exceeding ₦20 billion and multinational enterprises. This measure prevents aggressive tax planning and ensures that profitable companies contribute their fair share to national development.
International tax compliance receives significant attention through sophisticated anti-avoidance measures. The Act requires Nigerian companies to pay tax on undistributed profits of foreign subsidiaries that could have been distributed without harming business operations, effectively preventing profit shifting to low-tax jurisdictions. The Value Added Tax (VAT) system maintains the established 7.5% rate while incorporating strengthened administration measures. Additional revenue streams include a 5% surcharge on chargeable fossil fuel products, though this excludes clean energy products and household essentials. The explicit taxation of digital and virtual assets positions Nigeria ahead of the curve as the digital economy continues to expand.
Relief Measures and Institutional Transformation
Despite the focus on revenue enhancement, the reforms provide significant relief measures that demonstrate sensitivity to different business scales and individual taxpayers. Small companies with annual gross turnovers of ₦50 million and below are completely exempted from Company Income Tax, Capital Gains Tax, and the Development Levy, encouraging small business growth and entrepreneurship. For individual taxpayers, the first ₦800,000 of annual personal income is taxed at 0%, providing substantial relief for low and middle-income earners while ensuring that the tax burden falls more equitably on those with higher earning capacity.
The institutional reforms are equally transformative. The Federal Inland Revenue Service has been renamed the Nigeria Revenue Service, reflecting its expanded responsibilities and national scope. Value Added Tax (VAT) administration receives a significant boost through mandatory e-invoicing and fiscalization rules, bringing Nigeria's tax administration into the digital age. Perhaps most significantly, the reforms introduce a Tax Ombudsman office to provide independent arbitration for tax-related complaints, positioning Nigeria as a progressive early adopter of modern tax administration practices in Africa while ensuring taxpayer rights are protected.
The Missing Link: Non-Tax Revenue
However, despite these comprehensive reforms, a critical gap remains in Nigeria's revenue strategy. The new legislation focuses almost exclusively on tax revenue, leaving vast non-tax revenue opportunities untapped. There should be additional legislation to address non-tax revenue. This is important given Nigeria's current fiscal challenges, which are starkly illustrated by the 2025 budget figures.
Nigeria's 2025 budget reveals the magnitude of the revenue challenge facing the country. With a total expenditure of N54.99 trillion and projected revenue of only N41.81 trillion, the country faces a staggering deficit of N13.08 trillion, representing approximately 31% of total government revenue and 1.52% of GDP. This deficit is among the largest on record for Nigeria.
Most concerning is how this deficit will be financed. The Minister of Finance has clarified that the N13 trillion deficit will be financed through borrowing, which will add to Nigeria's already substantial debt burden. With additional borrowing of N9.2 trillion targeted for 2025, Nigeria's public debt could exceed N150 trillion by the end of 2025.
The constitutional framework already provides for extensive non-tax revenue opportunities. Section 162 of the Constitution defines the Federation's "revenue" to include any income or return accruing to the Government of the Federation from any source, including receipts arising from the operation of any law, returns from government property, and interest on loans and dividends.
Unleashing Nigeria's Non-Tax Revenue Potential
The potential for non-tax revenue generation is staggering and could significantly reduce Nigeria's reliance on deficit financing. Expert estimates suggest Nigeria could generate close to N100 trillion from various non-tax sources, including:
Asset Monetization
It is estimated that there are about 50,000 abandoned federal projects across the country valued at over N10 trillion. This is in addition to the Federal Government's landed property across Nigeria, estimated modestly at N5 trillion. The Ministry of Finance Incorporated (MOFI) is a federal government investment agency that holds N30 trillion worth of Federal Government assets. The Federal Secretariat in Ikoyi, Lagos alone is worth at least N120 billion and has been abandoned for over 40 years. Appropriate frameworks need to be developed to monetise these assets.
Local Content Enforcement
Local content is a policy that ensures that there is "Nigerian content" (local content) in the execution of projects. It is mostly applied in the Oil and Gas Industry by the Nigerian Oil and Gas Industry Content Development Act. Local content policy creates indigenous jobs and retains revenues that would have otherwise gone abroad. Local content policy in oil and gas has been successfully implemented in engineering, but not in other services like Legal, Banking, Insurance, and Shipping. Local content will need to be vigorously implemented under the Local Content Act. This will bring huge revenue accruals and jobs. Experts estimate Nigeria loses over $1 billion yearly from non-enforcement of local content in legal services alone. Imagine the loss from banking, insurance, and shipping.
Land Revenue Optimisation
The value of the Nigerian Housing Inventory is estimated at over $6 trillion, but 80% of properties in Nigeria are dead capital. They have no revenue value, and this is largely traceable to a lack of proper documentation and titling, such as a Certificate of Occupancy. Without these, the owners can't sell the properties easily, use them as collateral for loans, or attract investment. The solution is a massive reform of property titling to link property to the financial system. This will bring dead capital to life and transform it into revenue, which banks can recognise as collateral to benefit the economy. This will massively generate revenue and inject needed cash into the economy.
Port Infrastructure Revenue
This is potentially the largest economic sector outside oil and gas. A report by a Dutch consultancy firm, Dynanmar, shows that Nigeria loses about N20 billion daily (which annually is about N8 trillion) at the Lagos ports due to poor infrastructure. In other maritime sectors, Nigeria is estimated to be capable of generating N7 trillion annually and four million jobs over 4 years, but to deliver this, the following needs to be done: overhaul of ports infrastructure, Cabotage enforcement, the passage of critical maritime legislation like the Maritime Zones Bill, Ports Harbour Bill, etc. These laws, when passed, will generate non-tax revenue and attract massive investments in the sector.
Satellite Technology Revenue
Space is the next big investment arena. Space infrastructure companies received a record $14.5 billion of private investment in 2021, and the numbers are growing. These companies are ushering in next-generation small satellite capabilities with enormous value to commercial and government customers, including organisations in Energy, Mining, Manufacturing, Transportation, Finance, Security, Agriculture, and Communications. For Nigeria to fully derive benefit from these opportunities in terms of investments and development, including revenue and jobs, the 2006 Space Policy and the 2010 National Space Research and Development Agency (NASRDA)Act need to be updated. The Government needs to issue an Executive Order mandating Ministries, Departments and Agencies (MDAs) to procure only satellite data generated by NASRDA.
Judgment Debts
Nigeria's Federal Government is owed approximately N5.2 trillion in judgment debts by over 5,000+ debtors across ten (10) Ministries, Departments and Agencies (MDAs). These debts are in the form of debt liabilities to the Federal Inland Revenue Service (FIRS); refunds to the Government by companies who failed to deliver on projects for which payment had been effected, unpaid credit facilities granted to both corporate entities and individuals by the Bank of Industry (BOI) and Bank of Agriculture (BOA); judgment debt in favour of Government, debts owed Pension Transitional Arrangement Directorate (PTAD) by Insurance Companies etc. To recover these debts, there needs to be an inventory of all debts owed to the federal government. The Federal Government also needs to put in place an appropriate policy and legal framework to facilitate the recovery of these debts.
Looking Forward
While the tax reform bills represent a monumental step forward in modernising Nigeria's revenue system, they address only half of the revenue equation. The government must now turn its attention to the vast untapped potential in non-tax revenue streams. This requires not just policy changes but fundamental shifts in how government assets are managed, how compliance is enforced across MDAs, and how revenue generation is conceptualised beyond traditional taxation.
Given the scale of Nigeria's 2025 budget deficit of N13.08 trillion, the urgency of developing non-tax revenue sources cannot be overstated. The potential N100 trillion from non-tax sources could not only eliminate the budget deficit but also reduce Nigeria's dangerous dependence on borrowing, which threatens to push public debt beyond sustainable levels.
The success of these tax reforms will ultimately be measured not just by increased tax compliance and collection, but by their contribution to Nigeria's overall fiscal sustainability. To truly address the country's revenue challenges and reduce its dangerous dependence on borrowing, Nigeria must embrace a comprehensive revenue strategy that harnesses both tax and non-tax opportunities.
As the effective date of the new Acts approaches (expected to be no earlier than January 1, 2026), businesses and government agencies alike must prepare for this new era in Nigerian fiscal policy. The transformation has begun, but the work of building a truly robust and diversified revenue base is far from complete.
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