The Nigeria Revenue Service (NRS) has clarified that the newly enacted tax laws are strategically designed to stimulate economic growth and support business expansion, rather than focus on immediate revenue increases for the Federal Government.
Speaking during an X Space hosted by TheCable,Mr. Olufemi Olarinde, Head of Fiscal and Tax Reforms Implementation at the NRS, emphasized that the government’s current philosophy is to “tax right” by providing relief to citizens and businesses to foster a more robust economy in the long term.
Growth Over Revenue in the Short Term, Mr. Olarinde noted that the government does not expect an immediate spike in tax revenue for 2026. Instead, the reforms are structured to forego certain taxes to allow businesses to reinvest profits, expand operations, and create much-needed jobs.
Mr Olarinde stated that, “There is no aspect of this tax law that raises taxes; every aspect is focused on reduction,”. “The goal is to stimulate growth. When that growth is achieved, a natural and sustainable increase in tax revenue will follow. In the short run, the tax authorities will actually have to work harder to maintain previous revenue levels because we are prioritizing the health of the economy.”
Protecting the Vulnerable: VAT Exemptions A central feature of the new regime is the protection of low-income earners and the reduction of the cost of living. To achieve this, the Federal Government has expanded the list of essential goods and services exempted from Value-Added Tax (VAT). Key exemptions include:
Food and Agricultural Produce: Ensuring basic nutrition remains affordable.
Medical and Pharmaceutical Products: Reducing the financial burden of healthcare.
Zero-Rating for Manufacturers: Allowing companies producing essential goods to claim back VAT incurred during production, thereby lowering the final cost to consumers.
A Humane Tax System The NRS reiterated that the government’s stance is “not to tax poverty.” By zero-rating or exempting nearly 90% of the daily necessities of Nigerians, the reform aims to create a more progressive and humane tax environment.
The NRS encourages businesses to take advantage of the numerous incentives within the new law, which are designed to turn tax savings into capital for local economic expansion and industrial development.
