The Federal Government will effectively give up about N1.4 trillion in revenue in 2026 by reducing the corporate income tax (CIT) rate from 30% to 25%.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, disclosed this on Friday during a media workshop on the new tax laws.
Okay News reports that Oyedele explained the move is deliberate and aimed at stimulating economic growth rather than introducing new taxes.
According to Oyedele, data from the Federal Inland Revenue Service (FIRS) shows that corporate income tax collections stood at about N8.6 trillion in 2024.
A five percentage-point reduction from the current 30% rate translates to roughly N1.4 trillion that the government will forgo annually.
Oyedele said the tax reforms are anchored on the belief that sustainable government revenue can only come from economic expansion, not higher tax rates.
He argued that a growing economy naturally widens the tax base by creating jobs and supporting businesses, while excessive taxation only deepens economic stagnation.
The tax expert stated that the fastest and most sustainable way to generate revenue is to allow the economy to grow rather than impose higher taxes.
According to him, the new tax laws intentionally avoid introducing new levies, instead focusing on removing bottlenecks and reducing the cost of doing business in Nigeria.
Beyond the CIT reduction, Oyedele said businesses will benefit even more from changes to the Value Added Tax (VAT) regime, which will take effect from January 2026.
Under the new law, companies across sectors will be able to claim input VAT credits on assets, overheads, and services—categories that were previously excluded.
Oyedele explained that businesses will become eligible to claim input credits and receive money in their bank accounts starting January next year.
This will be in addition to existing input VAT credits on inventory, which are being retained under the new law.
Oyedele explained the impact of the VAT changes using bread as an example, noting that bread is currently VAT-exempt.
Under the current framework, bakers do not charge VAT on sales but cannot recover VAT paid on inputs such as sugar, butter, equipment, vehicles, and utilities.
Under the new framework, bread will become VAT zero-rated rather than exempt, allowing bakers to charge VAT at 0% while receiving full refunds on VAT paid on production inputs.
The same zero-rating principle now applies to food, education, and healthcare, sectors considered essential to household welfare.
Nigeria is implementing a comprehensive tax overhaul, with the main provisions of four new tax reform acts becoming effective on January 1, 2026.
President Bola Tinubu has recently approved the establishment of the National Tax Policy Implementation Committee (NTPIC) to drive the implementation of these new laws.
The newly constituted committee will be chaired by renowned tax expert Mr. Joseph Tegbe, a Fellow of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN).
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