Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms has said businesses will receive more than 4 trillion naira in direct relief next year through a combination of corporate income tax cuts and expanded VAT refunds, marking one of the country’s most aggressive pro-growth tax measures in decades.
The chairman of the committee, Taiwo Oyedele, speaking to journalists in Lagos on Friday, said reducing corporate income tax from 30 per cent to 25 per cent will leave at least N1.4 trillion in the hands of businesses, while the expansion of input VAT credits, now extended to assets, services, overheads and inventory, will return about N3.4 trillion to businesses.
“This is about the government returning over N4 trillion to the economy next year alone. The aim is to make Nigerian businesses profitable, competitive and able to employ more people,” Oyedele said.
He stressed that the broad reforms that will come into force from January 2026 are not intended to introduce new taxes but rather to eliminate long-standing distortions that have limited productivity.
“The fastest and most sustainable way to generate income is to allow the economy to grow. You cannot charge personal income tax on an unemployed person,” he said.
In addition to business relief, households are expected to benefit significantly from the reclassification of essential goods and services from VAT exempt to zero VAT rates, allowing producers and service providers to claim full VAT refunds on inputs. Housing, education, health services, transportation, food will benefit, those items that represent more than 70 percent of household spending, according to Oyedele.
Using bread as an example, Oyedele said bakers currently absorb VAT paid on flour, sugar, equipment and other inputs. “Starting next year, VAT will be refunded at 100 percent. This will reduce production costs and the benefit will be extended to consumers,” he said.
The reforms will consolidate the more than 200 formal and informal taxes that suffocate commerce throughout the country. The committee has proposed constitutional amendments to eliminate nuisance charges such as the bicycle tax, radio taxes and the agricultural products tax. States have also been given a model harmonization law to adopt in January to combat arbitrary tolls; Some transporters are currently facing 70 illegal charges for transporting food from the North to Lagos.
The new system will rely on data and automation to simplify compliance and eliminate physical interactions that fuel corruption. The old requirement for business bank accounts to carry a tax identification number will now apply only to persons with high value transactions exceeding N25 million per quarter.
“It’s not about the poor,” Oyedele emphasized.
Oyedele said the broader goal is to create a tax system that reduces costs for households, supports businesses and allows incomes to grow naturally. “Not by taxing people more, but by building an economy that works,” he said.
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