Nigeria Unveils Landmark Tax Reforms, Exempts Food, Education, Transport, and Agriculture from VAT

Nigeria’s tax system is undergoing its most sweeping reforms since independence, with the Federal Inland Revenue Service (FIRS) announcing that essential sectors—food, education, shared transport, and agriculture—will now be exempt from value-added tax (VAT).

The Executive Chairman of FIRS, Zacch Adedeji, revealed the changes in an interview marking his second year in office. He credited President Bola Tinubu for delivering on his promise to simplify tax compliance and ease the burden on citizens and businesses.

“With these new laws, food, education, transport, and agriculture will be VAT-free,” Adedeji stated. “The President has removed hurdles to allow businesses to flourish. This is the greatest transformation of Nigeria’s fiscal system since 1960.”

The reforms consolidate multiple tax laws into a single code, effective January 2026. Key provisions include reducing the number of tax types to single digits, exempting businesses with annual turnover below ₦50m from taxation, and adjusting income tax thresholds to protect low-income earners.

President Tinubu signed four major bills into law on June 26, 2025—the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act—collectively known as the “Tax Acts Quartet.” These laws broaden the tax base, improve compliance, and increase transparency across all levels of government.

Adedeji disclosed that the reforms are already delivering results: Nigeria’s tax-to-GDP ratio has risen from 10% to 13.5% in two years, with a target of 18% by 2027. Improved revenues have enabled 30 states to repay ₦1.85tn in debts over the last 18 months, while external reserves have grown, and debt servicing has dropped from 90% to about 50% of government earnings.

As part of the transformation, the FIRS will be renamed the Nigeria Revenue Service to reflect its role as the central tax authority for federal, state, and local governments.

While acknowledging the short-term pains caused by reforms, Adedeji likened them to “the pain of a woman in labour,” insisting that government interventions such as CNG buses and crude-for-naira support for refiners are already cushioning the effects.

He also clarified that a petrol surcharge provision in the new law would only apply if activated through a ministerial order published in the official gazette.

Concluding, Adedeji urged Nigerians to embrace the reforms: “When companies expand and make profits, the entire nation benefits. Our role is to remove barriers—and that is what the president has done with these laws.”