The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee (FPTRC), Mr. Taiwo Oyedele, has revealed that under Nigeria’s new tax reforms, only the top three per cent of informal sector operators are financially capable of paying taxes, while the remaining 97 per cent have been legally exempted from taxation.
Oyedele made this known on Monday during the PwC Executive Summit on Nigeria’s Tax Reform, held in Lagos, themed “The New Tax Era: What Nigeria’s Tax Reform Means to Individuals and Businesses.”
He explained that the reforms are designed to promote equity and protect low-income earners, noting that individuals earning below N800,000 annually are now exempt from personal income tax.
According to Oyedele, this progressive move is aimed at reducing the tax burden on Nigeria’s economically vulnerable populations while enhancing compliance among those with higher earnings.
“From our analysis, it is only the top three percent of the informal sector that has the ability to pay. Therefore, in these reforms, we have legally exempted the bottom 97 percent from paying taxes. Let them breathe. When they grow, they will have the capacity to pay,” Oyedele said.
He also noted that tax evasion would no longer go unchecked, warning that individuals or companies that understate their earnings to avoid tax obligations would be identified and penalized.
“If you go and lie and say your business is small when it is not, we will find out, and there shall be consequences,” he added.
Oyedele emphasized that the reformed tax framework introduces a more progressive structure in line with global standards, where wealthier individuals and businesses contribute more to public revenue than those at the bottom of the income ladder.
He also pointed out that across the globe, one percent of the population pays more in taxes than the remaining 99 percent, a reality that underscores the need for equity-driven policy.
The tax reform effort, which has culminated in the signing of four new tax bills by President Bola Tinubu on June 26, 2025, aims to streamline tax collection, improve compliance, and support economic growth. The laws will take effect on January 1, 2026.
Among the key highlights of the reform include employees earning less than N800,000 per year will be exempt from personal income tax, Federal taxes will be harmonised to reduce complexity and that the Federal Inland Revenue Service (FIRS) will now serve as the sole collector of all federal taxes.
Oyedele also disclosed that the gazette for the new tax laws is currently being printed in Lagos, and the final version would soon be made publicly available to guide implementation and compliance.
Also speaking at the summit, the Regional Senior Partner, PwC West Market Area, Mr. Sam Abu, stressed the importance of collaboration between the public and private sectors to ensure the success of the reforms.
“Policy alone won’t deliver. Real change requires partnership and commitment. It requires every single one of us—government, business leaders, and the private sector—to collaborate sincerely with the spirit of these reforms,” Abu said.
He added that PwC’s role is to help demystify the tax system for its clients, ensuring that businesses can focus on growth while maintaining compliance. “Our objective is clear. We want to remove complexity from tax, help clients anticipate risks, and provide practical, tailored solutions,” Abu noted.
With these reforms, the Nigerian government hopes to widen the tax net through improved efficiency, while protecting low-income citizens and creating an environment that fosters economic expansion, fairness, and transparency.
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