In a historic legislative breakthrough, the Nigerian Senate on Thursday passed the final two of four transformative tax reform bills, moving President Bola Ahmed Tinubu’s sweeping tax overhaul agenda one step closer to reality.
The passage of the Joint Revenue Board⁰1 (Establishment) Bill, 2025 and the Nigeria Tax Bill, 2025 during plenary completes the executive’s comprehensive tax reform package first transmitted to the National Assembly in late 2024.
This comes just a day after the Senate approved the Nigeria Revenue Service Bill and the Nigeria Tax Administration Bill.
“This is a turning point for Nigeria’s fiscal governance,” said Senator Sani Musa, Chairman of the Senate Committee on Finance.
“We are finally aligning our tax framework with global best practices to boost our tax-to-GDP ratio and secure long-term prosperity.”
Together, the four bills represent the most far-reaching overhaul of Nigeria’s tax structure in decades.
Key goals include simplifying compliance, improving revenue generation, and ensuring greater fairness across all income levels and sectors.
At the heart of the reform is the creation of the Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS).
The new agency will be governed by an independent board comprising a Chairman, Executive Vice Chairman, six Executive Directors, and representatives from key ministries.
To promote accountability and public confidence, the reforms also establish a Tax Appeal Tribunal and introduce a Tax Ombudsman, an independent office tasked with protecting taxpayer rights and ensuring administrative fairness.
A major innovation is the launch of a Single Tax Window, a centralized digital platform designed to streamline tax processes, reduce leakages, and ensure real-time compliance across all levels of government.
The Nigeria Tax Bill, 2025 introduces a series of impactful fiscal changes. Most notably: The Company Income Tax (CIT) rate will be reduced from 30% to 27.5% in 2025, with a further planned drop to 25%.
Small businesses with annual turnover below ₦50 million will be fully exempt from both income and withholding taxes.
A new progressive Personal Income Tax system will exempt individuals earning up to ₦800,000 annually, while capping the top marginal rate at 25% for incomes exceeding ₦50 million.
In a groundbreaking shift in fiscal federalism, the Value Added Tax (VAT) distribution formula will now be based on consumption rather than origin.
The new allocation will see the Federal Government receive 10%, states 55%, and local governments 35%.
The contentious Development Levy has also been revised—reduced from 60% to 50%—with 10% now earmarked specifically for defense infrastructure, reflecting the urgent need to bolster national security. Other allocations include: NASENI – 10%, NITDA – 10%, NELFUND (Student Loan Fund) – 15%, Cybercrime Fund – 5% and Defence Infrastructure – 10%
To curb abuse of tax waivers and protect domestic producers, the bills now require companies in Export Processing Zones (EPZs) that sell more than 25% of their output locally to be taxed at the same rates as Nigerian manufacturers.
Additionally, the new Joint Revenue Board (JRB)—which replaces the outdated Joint Tax Board—will promote stronger collaboration and data sharing between federal and subnational tax agencies.
Senate Majority Leader Opeyemi Bamidele emphasized that the National Assembly acted with diligence and independence throughout the process.
“We held 39 structured engagements with key stakeholders—including civil society, religious groups, oil and gas operators, and EPZ investors,” Bamidele said. “This wasn’t a rubber stamp process. It was deliberative and inclusive.”
Senator Musa affirmed that over 76 organizations were involved in shaping the legislation, citing the Christian Association of Nigeria (CAN), Islamic Sharia Council, League of Imams, and the Oil Producers Trade Section (OPTS) among others.
With Senate approval secured, a conference committee will now harmonize the Senate and House versions of the bills. The final harmonized versions will then be transmitted to President Tinubu for assent.
“This reform is long overdue,” Senator Musa added. “It will stand as one of the most consequential actions of the 10th National Assembly. We have given our best, and history will judge us.”
