Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has introduced 50 new tax exemptions and relief measures aimed at reducing the financial burden on low-income earners, average taxpayers, and small businesses. The measures are part of Nigeria’s new tax reform laws, set to take effect on January 1, 2026.
In a message shared via WhatsApp, Oyedele described the initiative as one of the most people-centered tax reforms in Nigeria’s recent history, emphasizing fairness, simplicity, and inclusiveness in the fiscal system. He said the reforms are designed to create a growth-friendly environment that allows ordinary Nigerians and small enterprises to thrive.
Key Provisions for Individuals
- Personal Income Tax (PIT) Exemptions:
- Individuals earning the national minimum wage or less will be fully exempt from PIT.
- Those earning up to ₦1.2 million annually will also be exempt.
- Workers earning up to ₦20 million per year will benefit from reduced PAYE rates.
- Tax-Free Benefits:
- Gifts received by individuals are now tax-exempt.
- Allowable deductions include contributions to pension funds, NHIS, NHF, interest on owner-occupied home loans, and life insurance or annuity premiums.
- Rent Relief: Renters will enjoy a 20% relief on annual rent, capped at ₦500,000.
- Retirees:
- Pension funds and assets remain tax-free under the Pension Reform Act.
- Pension, gratuity, and retirement benefits are exempt from taxation.
- Compensation for job loss up to ₦50 million is tax-exempt.
- Capital Gains Tax (CGT) Exemptions:
- Sale of an owner-occupied house and personal effects worth up to ₦5 million is exempt.
- Individuals may sell up to two private vehicles per year without tax liability.
- Gains from shares below ₦150 million per year (or up to ₦10 million) will be exempt.
- Higher gains may also qualify if reinvested.
- Pension funds, charities, and non-commercial religious institutions will not pay CGT.
Provisions for Businesses
- Small Companies:
- Firms with annual turnover not exceeding ₦100 million and total fixed assets below ₦250 million will enjoy a 0% Companies Income Tax (CIT) rate.
- Startups:
- Qualified startups under Nigeria’s labeled startup framework will also receive tax exemptions.
Oyedele emphasized that the reforms are designed to ease the tax burden, promote compliance, and stimulate economic growth by supporting households and small businesses.
