To close the widening revenue gap, the Tinubu administration introduced the Nigeria Tax Act 2025, which took effect on January 1, 2026 — the country’s first major tax overhaul in over 35 years.
The law simplifies taxation by merging over 60 taxes and levies into one system, exempts small businesses with turnover below ₦50 million from company income tax, and digitises collection for VAT, company tax, and withholding tax. The government targets ₦40.7 trillion in total tax revenue for 2026, with non-oil revenue expected to rise 37.9% to ₦24.836 trillion.
These measures aim to significantly improve Nigeria’s low tax-to-GDP ratio through better enforcement and digital tools. However, credibility concerns persist due to large gaps between official and independent debt-service-to-revenue figures. Political risks also remain high, as public resistance to major economic reforms could delay or weaken the expected gains.