One issue that would dominate discourse this year is the new tax laws which came into effect on January 1. Asides partisan politics, the tax issue would command significant attention. Already, many Nigerians are apprehensive on what to expect and how much the tax man (President Tinubu) is likely to take from their pockets.
Banks have already sent out notices to their customers on the payment of a N50 stamp duty on any transfer above N10,000. E-hailing Cab drivers have raised the alarm on what they termed double VAT deductions from their fees. Some Nigerians are considering closing down their bank accounts and electing to keep the little they have under their pillows at home, no thanks to the new tax regime. To worsen matters, there is so much misinformation and propaganda around the new tax regime, and the Federal Government has not helped to address the controversy that has dodged the gazetted Tax Act in the last couple of days. Our new tax umpire, Taiwo Oyedele, has declared that the tax Act is set to favour the masses and the down-trodden as little or no tax would be deducted from their monthly pay. He says that the intention of the government is to widen the tax net and ensure that rich Nigerians pay more taxes as it is done all over the world. However, many Nigerians find it difficult to believe him, signifying that they do not trust their leaders – especially when it comes to money matters. And when trust is lacking in any human endevour, truth becomes the first casualty.
It is a well-known fact that rich Nigerians pay little or no tax at all. They have a way of evading tax payments, and when it becomes inevitable, they pay peanuts and carry on with their lives. Many Nigerians in the informal sector are not adequately captured in the tax net. Oyedele wants to put a stop to that.
Since the establishment of his committee in August 2023, Oyedele has done a yoeman’s job of giving the nation a new tax system similar to what is operational in most advanced nations of the world. The outcome of the tax-focused deliberations was a set of four laws: The Nigeria Revenue Service (Establishment) Act 2025, which repeals the Federal Inland Revenue Service Act and creates the Nigeria Revenue Service with an expanded mandate, the Nigeria Tax Administration Act, 2025 – which establishes a uniform legal and operational framework for tax administration; the Joint Revenue Board (Establishment) Act, 2025 – which creates a governance structure and oversight mechanisms, and the Nigeria Tax Act, 2025 – which harmonizes the country’s multiple tax laws.
According to Oyedele, some of the highlights of the reforms are to have a simpler, fairer, and more transparent tax system that would achieve the objectives of putting people first; unlocking business growth; energizing capital and access to finance; correcting economic distortions; advancing progressivity; encouraging formalization; ensuring equity; combating evasion and avoidance; improving tax administration and governance, and harmonizing the tax system. In the official gazette published by the government, we are told that “the reforms create a tax system that Nigerians can trust, one that works for the benefit of all.” However, these two issues of trust and benefit have been the main problems with the reform process and its outcomes from the very beginning.
The first major hurdle Oyedele and his committee faced was the objection to the proposed tax reforms by Northern elites and state Governors over changes to the Value Added Tax (VAT) system. The main objection was about the proposed amendment to the VAT Act, which would allocate revenue based on the “derivation principle” that is, VAT funds would be distributed to states based on where goods and services are consumed and where the headquarters of the businesses generating the taxes are located.
Northerners kicked, stressing that this will place them at a disadvantage because many businesses have their headquarters in the South, particularly Lagos. They protested that the proposed amendment would reduce their share of VAT revenue while also alleging that they were not consulted by the Tax Reform Committee to accommodate their inputs.
But Oyedele stated in his response that the Northern Governors were, in fact, consulted, and that they made inputs into the review of the Tax laws. The noise generated by the controversy was loud and soon became politicized, pitching Northern Governors and opinion leaders against their Southern counterparts. As expected, the country became divided. Ethnic and religious sentiments added fuel to the fire. The whole process was delayed for almost a year, as Oyedele and members of the National Assembly had to return to the drawing board. The tax reform committee eventually found itself negotiating with the Northern Governors all over again, and at the end of the day, rather than a 60% derivation-based sharing of VAT, a compromise formula of 50% equality, 30% derivation, and 20% population was agreed upon. A political solution was found and the tax bills were eventually passed by the lawmakers. The Senate and the House of Representatives soon met to harmonise the different versions of the laws they came up with and a clean copy of the harmonised version sent to the President for his assent. President Tinubu gave assent on June 26, 2025.
With his presidential signatory, two of the New Tax Acts took effect immediately, while the other two took effect on January 1, 2026. However, during plenary on December 17, 2025, an opposition party member of the House of Representatives, Abdus-samad Dasuki (PDP, Sokoto), stated that his rights as a lawmaker had been breached following discrepancies in the harmonized versions of the tax laws passed by the National Assembly and the version gazetted by the Executive. He added that having spent three days reviewing the gazetted copies and the harmonized version adopted by both Chambers, he observed discrepancies in both. With that statement, Dasuki re-opened another round of controversies around the tax laws. The lower chamber set up an investigative committee to look into Dasuki’s allegation. If proven to be true, that would be a serious indictment on the Executive and there would be dire consequences. Neither Tinubu nor Oyedele have the power to alter any bill passed by the National Assembly.
In the event that the executive objects to any bill passed by our lawmakers, the appropriate thing to do is to withhold assent and return the bill to the Assembly stating reasons for refusal. Section 58 (4) of the 1999 Constitution was explicit on the matter. The National Assembly may amend the bill further in response to the stated reasons for refusal or override the Executive with a two-thirds majority as stated in Section 58(5). But to unilaterally rewrite a bill of the National Assembly and gazette a different version would be the very height of impunity and executive lawlessness. Many Nigerians are calling for the suspension of the Act pending the completion of the investigation, but President Tinubu as the tax man can no longer wait.
In his New Year message to Nigerians on January 1st, Tinubu said that the new tax laws will commence as scheduled, dismissing suggestions of any delay or reversals, and describing the reforms as a “once-in-a-generation opportunity” to establish a fair, competitive, and resilient fiscal framework for the country.
He stressed that the tax laws were not intended to increase the tax burden on Nigerians, but to reset the fiscal structure, promote harmonisation across the system, and strengthen the social contract while protecting citizens’ dignity.
Addressing reports of possible alteration to some provisions of the new laws, the President said that no substantial issues have been identified that would justify disrupting the reform process and cautioned against what he described as “premature and reactive decisions”, noting that trust in governance is built through consistent and well-considered actions over time.
He reaffirmed his administration’s commitment to due process and the sanctity of laws duly enacted, adding that the Presidency would continue to engage with the National Assembly to ensure that any concerns identified during implementation are resolved swiftly.
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The contentious sections are basically in the Tax Administration Act, and the specific areas of focus have been identified as Sections 27(3), 29(3), 41 (8), 60 (1). The complaint is that several oversight, accountability, and reporting mechanisms approved by the National Assembly have been removed. Oyedele, in response, has said that the government worked not with the version of the House of Representatives, but with the harmonized copy submitted by it.
In Nigeria, as it is in several parts of the world, nobody likes the tax man, and so it has been in our history. During the colonial era, the tax man was the most unpopular member of the Nigerian community. Our forefathers ran into the bushes on learning of the approach of the tax man. This would later lead to conflicts as witnessed in Lagos in 1916, when the colonial government introduced Water Rates to generate revenue to fund infrastructure, specifically the Iju Water Works, built in 1915. The people and the Oba protested.
In 1929, we had the Aba Women’s Riots in the Eastern Province of Nigeria, where the women protested against the taxation of women amongst other things. There were also the Iseyin/Okeho tax riots of 1917, the Adubi War of 1918, the Ogbomoso Tax riots in 1925 and 1955, the anti-tax riots in Warri Province (1927/28), and tax riots in Aba and Onitsha in 1956. In 1946, still in colonial Nigeria, Mrs. Funmilayo Ransome-Kuti, “the Lioness of Lisabi,” led Egba women in protest against what she and her followers considered the unfair taxation of women by the colonial authorities. They chased the then Alake of Egbaland, Ladapo Ademola away from his throne for a whole year, 1949 – 1950. They argued that there could be “no taxation without representation.” During the colonial era, the main issue was the burden of taxation, and additional hardship on the people.
In contemporary times, the average Nigerian is concerned about trust. Even if the people are willing to pay these taxes, they do not believe that the additional revenue will translate into better governance or improved infrastructure for the masses. Would we have better healthcare and qualitative education? Will our dilapidated roads that have become death traps for travellers receive the much-desired upgrade from the government? Will the standard of living of average Nigerians become better with constant power supply? These are germane questions that those forcing the new tax laws down the throat of Nigerians need to answer.
Must Nigerians hold the view that the additional revenue collected would only be used to fund the conspicuous consumption of the ruling elite, and nothing much would come out of the whole exercise for the masses.
Here lies the major problem confronting the Tinubu’s administration. We, at this end, will watch and monitor how the new tax laws would be implemented and the accrued benefits for the masses. The tax laws and its implementation would definitely define the directions the 2027 general elections will take.
See you next week.
