The lack of clarity in Nigeria’s new tax laws that’s led to widespread misunderstanding and public outcry could pose much bigger problems to President Bola Tinubu’s administration, according to Bismarck Rewane, managing director of Financial Derivatives Company.
“The biggest political risk this administration faces today is the misunderstanding of these tax laws because people believe that they are being violated,” Rewane said Thursday at the economic outlook organised by the Nigerian-British Chamber of Commerce.
The renowned economist said the tax reforms have created ‘confusion’ in the minds of the people, describing the laws as ‘too complicated,’ urging the government to ‘defer when in difficulty.’
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Nigeria kicked off its four harmonised new tax laws in January as part of the government’s broader reform agenda to simplify and eliminate leakages in tax collection and broaden its tax base while improving its share of revenue to gross domestic product from about 10 percent to 18 percent in the next two years.
Contrary to the fears that Nigerians will be taxed more, authorities have repeatedly said the vast majority of workers will see their taxes drop, as some of the key provisions of the reforms aim to lessen the burden on taxpayers. For instance, workers earning N800,000 and below annually are tax exempt, creating a breather for low-income earners.
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Key provisions of the new laws, specifically for entrepreneurs and small businesses, include eliminating CIT for companies with an annual gross turnover of N50 million or less, an exemption from the new 4 percent Development Levy, and an exemption from mandatory registration, charging, and remittance of Value Added Tax (VAT).
In its projections, SBM Intelligence, an Africa-focused market/security consulting firm, said protests are likely to emerge once the real impact of the new tax framework becomes clearer. While the firm expects the government to deploy significant political will to enforce compliance, it notes that public pushback may intensify before implementation challenges gradually subside by the end of 2026.
“Protests are expected to emerge as new tax laws take effect, and their effects become clearer,” the report says, noting that initial compliance challenges are likely to ease as enforcement systems stabilise.