President Bola Tinubu has transmitted tax reform bills to the National Assembly for consideration, with its attendant implications.The bill which was transmitted Tuesday, sought to bring about a unified and balanced tax payment regime that meets international best practices. It graduated tax payment according to income, profitability and revenue strings, exempting some businesses that have low annual turnover.In the new bill, the financial high and mighty are to pay more hence, the richer one becomes the higher tax one pays, as it is obtained in climes that operate an equitable tax system. Those on the low rung of the ladder are fully exempted.It brought into the tax net some businesses and platforms who hitherto were not captured.For instance, the digital economy has been brought into the net. The bill recognised and introduced taxation for digital assets, online services, and fintech activities.Taxation of gains from digital assets transactions are now clearly subject to Capital Gains Tax, reflecting the growing importance of the digital economy.Digital assets and transactions are taxed similarly to financial instruments, with gains subject to Capital Gains Tax at 10%.The bill also consolidated the tax laws by merging various tax regulations into a single legal framework, simplifying tax administration and compliance thereby reducing complexity for taxpayers.It bill granted tax incentives and reliefs for small businesses, exempting those with an annual turnover below ₦50 million from Corporate Income Tax to encourage entrepreneurship and small-scale enterprise growth.The bill streamlined withholding tax (WHT) rates for various transactions, ensuring taxes are deducted at source thereby reducing the likelihood of tax evasion.In line with the Finance Act, the bill removed VAT on rent-related transactions thereby reducing the financial burden on businesses and individuals who lease properties.Other items on the new tax bill include:Corporate Income Tax (CIT): Small companies (annual turnover below ₦50 million) are exempted from CIT.Other companies: For the year of assessment 2025: 27.5% of taxable profits with a reduced rate of 25% from 2026.Personal Income Tax (PIT): Annual salary of₦800,000 enjoys 0%, ₦2,200,000: 15%₦9,000,000,18%, ₦13,000,000: 21%,₦25,000,000: 23% and ₦50,000,000 and above: 25%.Withholding Tax (WHT): As contained in the earlier gazetted WHT Regulations, 2024.Capital Gains Tax (CGT): 10% on gains arising from the disposal of chargeable assets, including real estate and shares.Value Added Tax (VAT): The VAT rate specified in the New Tax Bill is as follows:For the year 2025, VAT is set at 10%. And from2026 to 2029, VAT is set at 12.5%, while from 2030 onwards, VAT will be set at 15%.These progressive rates reflect a strategic approach to increase VAT over time, aligning with the government’s revenue optimisation goals.The New Tax Bill marks a major reform in Nigeria’s tax system, offering a comprehensive, unified, and modern framework for taxation. By broadening the tax base, simplifying compliance, and recognizing emerging sectors such as the digital economy, it positions Nigeria to enhance revenue generation while promoting fairness and equity.As the Bill takes effect from 2025, it is expected to streamline tax administration, support business growth, and encourage compliance, while fostering a tax system that is responsive to the needs of Nigeria’s rapidly evolving economy.
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