The Federal Government is drafting a new finance bill to fix gaps in Nigeria's tax laws, according to Minister of State for Finance Taiwo Oyedele. He made the disclosure at the 2026 Nigerian Bar Association Section on Legal Practice Annual Conference, stating the reforms aim to create a fairer, more transparent tax system. Oyedele highlighted that under the previous regime, individuals paid about 19 percent in taxes while companies faced rates above 40 percent, a disparity he called misaligned with global standards. The overhaul seeks to encourage business formalisation by reducing administrative discretion and ensuring policy consistency. He warned that sudden policy changes, such as proposed tax hikes on gas companies, had damaged investor confidence, stressing that consistency is critical. To protect vulnerable groups, individuals earning around N1 million annually and many small businesses are exempt from taxation. Essential sectors like food, education, and healthcare are now VAT-exempt, and loss-making businesses will no longer be subjected to minimum tax. Oyedele revealed that existing tax laws have been streamlined into four core legislations, including the Nigeria Tax Act and the Nigeria Tax Administration Act, to simplify compliance. He attributed past inconsistencies to manual drafting and multiple review stages, which the new bill aims to resolve.
Taiwo Oyedele's push for a new finance bill exposes a long-standing flaw in Nigeria's fiscal governance: tax policy shaped more by ad hoc decisions than coherent design. The revelation that companies once faced tax burdens over 40 percent while individuals paid 19 percent isn't just a statistical oddity—it reflects a system that penalised formal enterprise while failing to broaden the base. This imbalance, as Oyedele admits, actively discouraged businesses from operating in the open economy, feeding the vast informal sector that continues to elude revenue collection.
The context here is not just legal reform but economic survival. Nigeria's heavy reliance on volatile oil revenues has made stable, predictable taxation a strategic necessity. Past abrupt shifts—like the scrapped plan to hike gas taxes—have eroded trust, and the current effort to consolidate laws into four clear acts signals a belated recognition that clarity drives compliance. By shielding low earners and loss-making firms, the government is attempting to decouple taxation from survival, a shift from the old habit of squeezing revenue from those least able to pay.
For millions of small business owners and low-income workers, the changes could mean reduced harassment from tax officials and a clearer line between taxable and exempt activities. If implemented without backdoor discretion, the reforms may encourage more Nigerians to formalise operations, knowing the rules won't change overnight.
This fits a broader pattern: Nigeria's tax architecture is finally being treated as a system, not a collection of revenue raids. The real test will be whether the new bill survives political pressure to revert to quick-fix levies when budgets fall short.
