There is a lingering sense of distrust across Nigeria following the implementation of the tax reforms despite the controversy over alleged alteration of the original documents.

This is just as citizens and business owners expressed mixed reactions to the tax reforms which the government says were aimed at broadening the tax base, improving compliance, and boosting public revenue.

While the government through the Presidential Tax and Fiscal Reform Committee led by Taiwo Oyedele insists the reforms are necessary to stabilise the economy and reduce overreliance on borrowing, many Nigerians remain sceptical, citing concerns over transparency, equity, and the practical impact on already strained livelihoods.

President Bola Ahmed Tinubu had last year signed four tax bills into law.

The implementation of the laws became a subject of public debate when a member of the House of Representatives raised an alarm over alleged alteration of the gazetted bills.

The lawmaker from Sokoto State, Abdussamad Dasuki, raised a point of privilege, drawing attention to what he described as inconsistencies between some versions of the tax laws in circulation and the texts debated and passed by the National Assembly.

Already, the FIRS has transformed into NRS with a new brand identity as the new laws take effect.

However, reactions from the public suggest that trust in government intentions remains fragile. Many citizens question whether increased tax revenues will translate into tangible improvements in public services.

Business owners fear that despite assurances of harmonisation, the reforms may still expose them to overlapping demands from federal, state, and local authorities.

Some also worry that increased enforcement could lead to harassment by revenue agents, especially in the informal sector.

“We hear about reforms every year, but in reality, different agencies still come to collect different levies,” said a trader at Sunday Market, Lagos, Mrs. Nkechi James.

According to her, “Instead of making business easier, it sometimes feels like the pressure is increasing on a daily basis.”

On the other hand, some corporate organisations and tax professionals have welcomed aspects of the reforms, especially moves towards clarity and digitalisation.

They said a simplified and transparent tax system could, over time, reduce uncertainty and improve Nigeria’s attractiveness to investors. According to them, clear rules and predictable tax policies are essential for long-term business planning.

Another small business owner, Timothy Chinedu who is the CEO of Timo-Tech Electronics Trading Stores said, “What we heard so far is that people should be putting narration in whatever transactions are being done. We don’t know what we would achieve with that.”

When reminded of the assurance that small business owners would be exempted from taxes, he said, “Until then, we can’t take the government’s promise to the bank now. We are yet to start feeling the impact and we feel the government is more interested in taking more money from us despite the fact that we are still struggling under the impact of inflation and high cost of living.”

Early implementation

One major change noticeable from the implementation of the reform is the transformation of Electronic Money Transfer Levy (EMTL) into Stamp Duty.

Prior to January 1, 2026, the deposit money banks as well as fintechs had sent messages to their customers informing them of the new change.

One of the messages read: “In accordance with the Nigeria Tax Act (NTA) 2025, the Electronic Money Transfer Levy (EMTL) has been renamed Stamp Duties effective January 1, 2026. N50 Stamp Duties will be charged on your account when you transfer N10,000 or more to another beneficiary as mandated by the Federal Inland Revenue Service (FIRS). The sender will be charged Stamp Duties and not the receiver.”

With the take-off of the tax reform laws, many customers have already confirmed being charged stamp duty for electronic transactions of N10,000 and above.

Unlike before when a receiving account was charged N50 from transactions of N10,000 and above as EMTL, the stamp duty of the same N50 would now be incurred by the person making the transfer.

LCCI calls for transparent implementation

The Lagos Chamber of Commerce and Industry (LCCI) while welcoming the reform said, “Effective and transparent implementation of the Tax Reform Act is essential to simplify compliance, reduce the burden on productive enterprises, and broaden the tax base without stifling growth.”

President of the chamber, Engr. Leye Kupoluyi said, “policies must deliberately focus on inclusive growth by rebuilding household purchasing power, supporting pro-poor investments, strengthening social safety nets, and accelerating job creation, especially for youth and SMEs.”

Low-income earners protected

Former Chairman of the National Association of Small and Medium Enterprises (NASME) in Lagos, Prof. Adebayo Adam said the tax reforms by the Federal Government are being widely misunderstood, stressing that the new framework is designed to protect low-income earners while ensuring the wealthy pay their fair share.

Speaking with Daily Trust, Adam noted that much of the confusion surrounding the reforms stems from misinformation about Nigeria’s tax administration.

He observed that 2026 could mark a turning point for Nigeria’s economic recovery if the reforms are properly implemented.

According to him, many businesses that collapsed in previous years due to harsh economic conditions are already positioning themselves to return.

“Several businesses that died before will begin to reinvest and revive. You will see renewed confidence, expansion, and innovation because the environment is gradually becoming more enabling,” he said.

He stressed that technology must play a central role in driving the reforms and broadening the economy.

Adam however advised that the revenues to be generated from the tax reforms must be transparently managed and channelled into productive sectors, saying by this Nigeria could experience a more inclusive and resilient economy, where growth is driven by innovation, small businesses, and manufacturing rather than consumption and borrowing alone.

“They need to open up businesses and open up the economy and let a lot of people participate. Government should be able to respect the rule of law. If the government fails to respect the rule of law, they are going to fail.

“They must cross their I’s, dot all their T’s and they must be responsible in terms of spending. Their recurrent expenditure is too much, they need to curtail it, cut it down and let people see it. You can’t tell me to tighten my belt, you want to kill me while you are spending lavishly. Government must be disciplined. Discipline is part of leadership,” he said.

Full compliance not realistic – CPPE

The Centre for the Promotion of Private Enterprises (CPPE) in a policy brief on the new tax reforms described it as the “most ambitious fiscal restructuring efforts in recent decades.”

According to the Chief Executive Officer of the centre, Dr. Muda Yusuf the tax reform “is a sound and progressive framework—aimed at strengthening revenue mobilisation, improving equity, simplifying the tax system, and aligning fiscal policy with economic diversification and growth objectives.”

He however raised concerns that “without careful sequencing, political sensitivity, and economic realism, even well-intentioned reforms can trigger resistance, disrupt livelihoods, and further erode public trust.”

Yusuf noted that Nigeria’s current reform is unfolding under unusually delicate circumstances.

He said, “The economy is still absorbing the aftershocks of elevated inflation, weakened purchasing power, and the adjustment costs of fuel subsidy removal and foreign exchange reforms. Many households and businesses are experiencing reform fatigue. Compounding this is the approach of a politically sensitive pre-election period.

“In this context, expecting full and simultaneous compliance across all sectors of the economy is unrealistic. A rigid, enforcement-heavy approach risks undermining reform credibility before its benefits have time to materialise.”

He noted that public resistance to the reform was “rooted in lived experience,” saying, “For many Nigerians, past reforms have translated into higher living costs and declining welfare, with little evidence that sacrifices result in improved public services.

“A weak social contract continues to undermine confidence that additional tax revenues will be transparently and efficiently deployed. With businesses and households still recovering from recent macroeconomic shocks, tolerance for new compliance demands is understandably low. In this environment, trust is as critical as technical design.”

He further observed that any serious discussion of tax reform in Nigeria must confront the scale of the informal economy.

“With an estimated 40 million micro, small, and nano enterprises—over 80 percent operating informally—the informal sector is not peripheral; it is central to employment, income generation, and economic resilience. Over 90% of jobs are in the informal economy, according to the last Nigeria Labour Force Survey by the National Bureau of Statistics [NBS].

“Most informal operators lack structured record-keeping systems and have limited understanding of tax concepts such as Tax Filing obligations, Company Income Tax [CIT], Value Added Tax [VAT], Personal Income Tax [PIT], Withholding Tax etc. Businesses are largely cash-based, operate on thin margins, and often lack the literacy and digital capacity required for compliance. They also lack the capacity to digest the technical and somewhat complex issues around taxation.

“Yet the new tax framework introduces mandatory filing requirements, defined record-keeping standards, penalties for non-compliance, and presumptive taxation where records are inadequate. Without careful sequencing, these provisions risk criminalising informality rather than encouraging gradual and voluntary formalisation.”

He pointed out that several specific provisions and regulations have intensified concerns among small businesses and households.

He made reference to the mandatory reporting of quarterly bank transactions of N25 million and above to the tax authority which he stated has raised anxiety among SMEs that handle pass-through or custodial funds that do not constitute income.

The economist noted that high-turnover, low-margin businesses risk undue scrutiny and costly compliance disputes.

“The proposed increase in capital gains tax from 10 percent to 30 percent—despite assurances around thresholds—has unsettled investors in the stock market and real estate at a time when confidence remains fragile. Similarly, the N500,000 annual rent relief cap is misaligned with prevailing urban housing costs and risks further squeezing middle-class disposable income.

“Concerns are further heightened by the wide enforcement powers granted to tax authorities and the severity of penalties and sanctions embedded in the tax laws.”

He advised the federal government to be mindful of the 2027 election dynamics as 2026 is a pre-election year, saying “political and social caution is imperative.”

“Aggressive, broad-based enforcement risks social discontent, political backlash, and potential reform reversal. Stability, trust-building, and reform credibility must take precedence over short-term enforcement optics,” he said.

He added, “Tax reform is essential for Nigeria’s fiscal sustainability, but implementation strategy will ultimately determine success or failure. A phased, pragmatic, and socially sensitive approach—anchored on trust, economic realities, and political timing—offers the most credible pathway to sustainable revenue growth, expanded compliance, and long-term legitimacy.”

An economist with Al-Hikmah University, Ilorin, Dr. Muhammad Bashir Yusuf, said the tax policy, though well intentioned, may place additional pressure on ordinary Nigerians if not carefully implemented.

Dr. Yusuf explained that the central idea behind the reform is to widen the tax net, particularly by bringing more small businesses into the tax system, noting that this is, in principle, beneficial to the economy.

“The idea behind the reform is to restore the tax net so that more people can pay tax, especially small businesses.

"In principle, this is good for the economy because government revenue should come from the people,” he said.

However, he expressed concerns over weak public trust and implementation challenges, stressing that many Nigerians are reluctant to pay taxes.

According to him, businesses are also likely to pass the tax burden on to consumers rather than absorb it themselves, even though Nigeria’s tax rates remain among the lowest globally.

“From experience, businesses often transfer the tax burden to consumers instead of absorbing it. Even though the tax rate is relatively low, businesses may still increase prices to cover taxes, and that is how citizens are likely to feel the impact,” he said.

Yusuf further noted that the biggest concern lies with the ordinary Nigerian, particularly those already struggling with rising costs and multiple deductions on financial transactions.

“There is a lot of apprehension and misinformation. Many Nigerians are worried without fully understanding how the reform works,” he said.

He pointed out that some workers might even experience improvements in their take home pay if tax deductions reduce following salary adjustments, urging Nigerians to avoid panic.

On fears that transaction deductions could worsen the situation for small businesses and individuals, Dr Yusuf advised caution and patience.

“At this point, people should wait and see how the policy unfolds. The fear is understandable, but not all the concerns being circulated are accurate. Policy improvements usually come gradually, not all at once,” he said.

He stressed that transparency and effective communication would be critical to the success of the reform, saying people need to clearly understand what they are paying and why.

“The tax deductions are not to be removed from your bank transactions and anybody already experiencing this should go to their banks to complain or find out if something sinister is going on taking advantage of the tax reform. You are only deducted from what you file and it’s yearly,” he noted. (Daily Trust)

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