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Nigeria Enters New Tax Era as Tinubu Signs Landmark 4 Reform Bills into Law

President Bola Tinubu has signed four major tax reform bills into law, marking a significant overhaul of Nigeria’s fragmented and inefficient tax system. The laws unify tax codes, streamline administration across federal, state, and local governments, and establish a more autonomous Nigeria Revenue Service in place of the current Federal Inland Revenue Service (FIRS).

The reforms aim to reduce multiple taxation, lower business compliance costs, and create a more predictable fiscal environment. With Nigeria’s tax-to-GDP ratio still below 11%—well under Africa’s 16% average—the goal is to broaden the tax base and increase revenue without raising marginal tax rates.

However, despite these reforms, Nigeria’s tax structure remains dominated by indirect taxes based on the benefit approach rather than the ability to pay—placing the tax incidence disproportionately on the poor and making the system inherently regressive. Furthermore, while revenue may increase, higher collections alone do not guarantee economic growth. The real challenge lies in institutional reform and effective synergy between fiscal institutions and other arms of government.

Rethinking infrastructure as a future readiness factor

Nigeria’s manufacturing sector is underperforming, contributing just 10.06% to GDP between 2010 and 2023—down from 20.23% in 1981. High operational costs, driven by poor infrastructure, make imports cheaper than local production. A major constraint to manufacturing output and productivity is the availability and quality of power supply, with the national grid generating less than 6,000 MW.

In the cement industry, independent power generation has made a difference. A notable example is Dangote Cement, which vertically integrated its operations by building its own power plants. This move cut energy costs, ensured operational stability, and helped Nigeria transition from a net importer to a net exporter of cement.

Today, digital infrastructure is emerging as the next strategic enabler. Internet penetration remains low at 39%, with fixed broadband access at just 0.05%. Expanding access could unlock productivity gains, improve market efficiency, and enable new business models across sectors.

In this latest edition of Whispers, the FDC Think Tank takes a deep dive into recent economic developments and their impact on your business and corporate strategy.