Nigeria kicks off new tax regime vowing relief for low earners

The new system, based on four bills signed into law in June, came into effect despite calls for a delay by the opposition which alleged that the goverment had made unauthorised changes to the tax code.

The four laws -- the Nigeria Tax Law, Nigeria Tax Administration Law, Nigeria Revenue Service (Establishment) Law, and Joint Revenue Board (Establishment) Law -- are a "one-stop shop," simultaneously increasing revenue generation and reducing the tax burden on low-income earners, tax expert Chukwuema Eze told AFP.

Opposition leader Atiku Abubakar accused the government of inserting "illegal and unauthorized alterations" to the laws.

President Bola Tinubu, who has energetically backed the tax reforms, dismissed the claims, calling them "premature" and "reactive", and said the new tax regime was in Nigeria's best interest.

"No substantial issue has been established that warrants a disruption of the reform process," Tinubu said in a statement on Tuesday.

In his New Year message, the president insisted that his tax reforms were "designed to build a fair, competitive, and robust fiscal foundation for Nigeria."

"By harmonising our tax system, we aim to raise revenue sustainably, address fiscal distortions and strengthen our capacity to finance infrastructure and social investments that will deliver shared prosperity," he said.

The west African economic powerhouse has a tax-to-GDP ratio of 13.5 percent, according to government figures, which is below the continental average.

The tax-to-GDP ratio is a measure of a government's capacity to raise money for public services and infrastructure.

By comparison, The EU and US have a tax-to-GDP ratio of over 25 percent.

Nigeria, divided into 36 states, has long struggled to reform its tax system -- with the government saying its new package will "harmonise" levies across the nation.

"This is a significant step toward building a simpler, fairer, and more growth-oriented tax system," Taiwo Oyedele, who heads Tinubu's tax reforms committee, said on X on Thursday.