As the year winds down, Nigeria is settling into a familiar end-of-year ritual: reflection mixed with anxiety about what lies ahead. In motor parks, markets, offices and across social media timelines, one topic dominates conversations, the new tax regime scheduled to take effect in January.

For many Nigerians, it has become both a symbol of fear and expectation: fear, because taxation in Nigeria is often associated with coercion and hardship; expectation, because after a bruising economic year, there is a longing that things might finally begin to turn around.

From January 1, 2026, the federal government will begin implementing four major laws, the Nigeria Tax Act, 2025; Nigeria Tax Administration Act, 2025; Joint Revenue Board of Nigeria (Establishment) Act, 2025; and the Nigeria Revenue Service (Establishment) Act, 2025. Together, they form one of the most ambitious tax overhauls Nigeria has attempted in decades.

On paper, the reforms promise sweeping changes: over 50 targeted exemptions and reliefs, the end of multiple taxation, the outlawing of touting and roadblocks used in the name of revenue generation, and a more coordinated tax system across federal, state and local governments.

Yet, away from policy documents and official briefings, a different narrative has taken hold.

“From January, they will tax everything,” is now a casual refrain, repeated by traders, artisans and even salaried workers. The new tax regime has taken on a life of its own, shaped more by rumours and propaganda than by the actual content of the laws.

That fear was recently heightened by claims that the gazetted versions of the tax laws differed from what the National Assembly passed, a report later debunked by Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee. Although the National Assembly ordered a regazetting of the laws, the episode reinforced public suspicion.

Economists say the confusion reflects a deeper problem.

“In the absence of consistent, clear public communication, speculation fills the vacuum,” said a tax consultant in Lagos. “People end up reacting to policies that do not even exist, while ignoring what the reform actually says.”

The anxiety is most intense in the informal sector, where millions already feel overburdened, harassed by multiple levies, and largely excluded from social protection.

Government’s case: relief, not punishment

Officials insist the fears are misplaced. Speaking after a meeting with President Bola Tinubu in Lagos on Friday, Oyedele described the reforms as pro-people and growth-driven.

“These reforms are designed to provide relief to the Nigerian people,” he said.

According to Oyedele, the biggest beneficiaries will be ordinary workers. “Bottom 98% of workers will see either no PAYE tax or lower taxes to be paid,” he stated.

Small businesses, he added, would also gain significantly. “97% of them will be exempted from corporate income tax, VAT, withholding tax,” while even large companies are expected to pay less under the revised framework.

The goal, Oyedele argued, is not to squeeze more money out of a struggling population but to restructure the system to support growth, inclusion and shared prosperity.

“The whole idea is to try and promote economic growth, inclusivity, as well as shared prosperity for our people,” he said, expressing optimism about the rollout. “We’re actually excited at the progress we’re making and we’re looking forward to January 1st, 2026.”

In his view, sustainable revenue will come from economic expansion, not higher rates. “We believe that over time you get revenue from growth when the economy is growing. People pay not because the tax rate has gone up but because the base has increased,” Oyedele said.

The economics of coping

Beyond revenue, he said the reforms are expected to improve Nigeria’s weak tax culture and compliance. “If people that were not paying before start paying, and they’re not low-income earners, not only do you get more revenue, you get fairness for society,” he added.

Why Nigerians remain skeptical

Despite these assurances, distrust runs deep. For decades, taxation in Nigeria has been synonymous with aggressive collections, overlapping levies and little evidence of service delivery in return. For many citizens, taxes have felt more like punishment than civic duty.

Simon Samson, chief economist at ARKK Economics and Data Limited, says much of the current anxiety is driven by misinformation.

“People are normally anxious about new things, and lack of full information exacerbates this,” he said. “People assume this new tax law would make them pay more taxes. If it is about rates, that is not correct.”

What will change, Samson explained, is the size of the tax net. “More people, particularly businesses and individuals in the informal sector, will be brought into the tax net. That does not mean those already paying taxes will pay higher rates.”

On the long-standing problem of multiple taxation, Samson pointed to the Joint Revenue Board Act as a potential game-changer.

“The JRB would coordinate all taxes and ensure everyone gets a fair shake,” he said. “By eliminating overlapping levies and reducing inefficiencies, evasion and harassment, the reforms should not worsen the cost of living if properly implemented.”

The Abuja-based lecturer added that new mechanisms such as tax ombudsmen and tribunals could offer protection to taxpayers, a sharp contrast to past practices.

Beyond hardship, towards stability?

Away from the noise, there are tentative signs that Nigeria’s economy may be stabilising. Pressure on foreign exchange markets has eased slightly, businesses report improved access to forex, and analysts are predicting further inflation moderation and renewed investor interest.

For some entrepreneurs, these shifts are already tangible, feeding a quiet hope that the painful adjustments of 2025 may begin to yield results.

If implemented well, Samson believes the tax reforms could support long-term stability rather than short-term hardship. Diversifying revenue away from oil would reduce Nigeria’s exposure to global price shocks, while higher thresholds and exemptions for MSMEs could help businesses thrive and attract investment.

“Harmonisation of tax laws would also boost investor and consumer confidence,” he said, “and that is critical for growth.”

On rebuilding public trust, the economist said the government must break from past practices that associated taxation with coercion rather than citizenship. He called for a transparent and corruption-free tax administration, greater accountability to taxpayers and clearer links between taxes collected and public projects delivered.

“Tying taxes to visible projects would help people see the results of their contributions,” he said, stressing that authorities should incentivise compliance rather than rely on force. According to him, only by demonstrating fairness and accountability can tax compliance begin to be seen as a civic duty rather than an imposed burden.

Modest hopes for a fragile year ahead

For many Nigerians, expectations for the new year are cautious rather than grand: clarity instead of confusion, stability instead of constant shocks, and breathing space after years of strain.

Young professionals are watching closely. For them, economic recovery is not an abstract idea but something tied to jobs, salaries and the ability to plan a future.

As the countdown to the new year begins, Nigeria stands at a familiar crossroads, between fear shaped by past disappointments and hope fuelled by the promise of reform. Whether the new tax regime becomes a turning point or another missed opportunity will depend less on the laws themselves, and more on how transparently, fairly and humanely they are implemented. (BusinessDay)

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