This is the Nigeria Revenue Service (NRS) Tax Return 2026 guide that explains what the Nigeria’s New Tax Regime means for Businesses, Workers, and the Informal Economy. Nigeria formally entered a new tax era on January 1, 2026, as far-reaching fiscal reforms signed into law by President Bola Ahmed Tinubu began full implementation. For businesses, salary earners, traders, and professionals across Abuja, Lagos, Kano, Port Harcourt, and beyond, the 2026 tax return season is the first real test of a system the Federal Government describes as simpler, fairer, and more growth-oriented.
At the centre of the reforms is the Nigeria Revenue Service (NRS)—the successor to the Federal Inland Revenue Service (FIRS). Although many Nigerians still casually describe the process as “IRS tax return,” the authority responsible for federal tax collection is now the NRS, established under a new legal regime designed to eliminate overlapping taxes, widen the tax base, and reduce dependence on oil revenue.
The reforms are anchored on four landmark tax laws signed on June 26, 2025, and they represent the most comprehensive overhaul of Nigeria’s tax system since the introduction of VAT in the 1990s.
Why Nigeria Changed Its Tax System
Nigeria’s long-standing reliance on crude oil revenue has left public finances dangerously exposed. By 2023, when President Tinubu assumed office, government revenue was struggling under the weight of:
- rising public debt estimated at over ₦87 trillion,
- debt servicing that outpaced revenue,
- inflation exceeding 25 percent,
- and widespread poverty affecting over 133 million Nigerians.
With Nigeria’s tax-to-GDP ratio stuck between 10 and 13 percent, far below the African average, the government turned to structural tax reform as a survival strategy rather than a policy choice.
The Presidential Fiscal Policy and Tax Reforms Committee, chaired by tax expert Taiwo Oyedele, was set up in August 2023 to harmonise Nigeria’s fragmented tax system and restore confidence among taxpayers, especially businesses and SMEs.
A Brief History: From Colonial Taxes to Digital Compliance
Taxation in Nigeria has always reflected power and economic realities. Colonial-era taxes were extractive, sparking resistance such as the 1929 Aba Women’s Riot. Post-independence, military rule centralised tax authority, while democracy reintroduced state-level taxation—often without coordination.
By the 2010s, Nigerian businesses were contending with over 60 different taxes imposed by federal, state, and local governments. Market traders, transport operators, and SMEs bore the brunt of this confusion.
The 2025 tax reforms attempt to end this cycle by collapsing multiple levies, clarifying tax powers, and digitising compliance.
What the New Tax Laws Actually Changed
1. Nigeria Tax Act (NTA)
- Exempts personal income up to ₦800,000 annually
- Exempts businesses with turnover below ₦25 million from corporate income tax
- Gradually reduces corporate tax for large companies
- Introduces a unified 4% Development Levy
- Brings digital assets, crypto, and online services into the tax net
2. Nigeria Tax Administration Act (NTAA)
- Mandates electronic filing and payment
- Links tax identity to NIN or CAC registration
- Introduces presumptive tax for informal businesses
- Strengthens penalties for evasion
3. Nigeria Revenue Service Act (NRSA)
- Establishes NRS as a more autonomous revenue authority
- Expands enforcement powers using data and technology
4. Joint Revenue Board Act (JRBA)
- Coordinates federal, state, and local taxes
- Eliminates multiple taxation, especially market and transport levies
What Filing 2026 Tax Returns Means in Practice
Salary Earners
Minimum-wage and low-income workers are fully exempt from income tax. PAYE continues, but reconciliation and refunds are now digital.
SMEs and Informal Businesses
This is where the reforms are most significant:
- 97 percent of registered businesses pay no corporate income tax
- Presumptive taxes replace daily harassment by revenue agents
- VAT and withholding obligations remain, but processes are clearer
However, to enjoy these benefits, businesses must formalise, maintain records, and file electronically.
Similar Taxation Updates
- The Role of The Attorney General in Taxation and Tax-Related Matters
- Tax implications on Cash-out Refinance for Homeowner rental property
- Legal Industry Adopts Cloud Computing for Solicitors & Law Firms
- Benefits of Registering your Business Name with CAC (Corporate Affairs Commission)
- NRS Tax Return 2026: What Nigeria’s New Tax Regime Means for Citizens, Businesses, and the Economy
- Nigeria’s Taxation System: Entrepreneurs, Businessmen, and Traders must Understand Tax Laws
- Nigeria’s Tax System: Evolution, Reforms, Controversies, and the Tinubu Era
How the Reforms Play Out Across Key Nigerian Cities
Abuja: Public Sector, Consultants, and Informal Growth
In Abuja, the reforms mainly affect civil servants, consultants, contractors, and freelancers. Junior public servants benefit from higher exemptions, while contractors dealing with MDAs face stricter compliance due to automated deductions.
Informal operators—ride-hailing drivers, PoS agents, and freelancers—are increasingly captured through NIN-linked tax IDs, especially in satellite towns like Kubwa and Lugbe.
Lagos: Corporate Nigeria and SME Formalisation
Lagos remains Nigeria’s tax powerhouse. The reforms push stronger coordination between NRS and LIRS, reducing duplication.
Tech startups, e-commerce platforms, and digital service providers now face clearer rules on economic presence. SMEs benefit from exemptions but must register with CAC to qualify, accelerating business formalisation across the state.
Kano: Traders, Markets, and Manufacturing
In Kano, the focus is on market levies and small manufacturers. The consolidation of levies under the Joint Revenue Board reduces arbitrary collections in major markets.
Presumptive taxation simplifies compliance for traders, while VAT exemptions on agricultural inputs support local production. Acceptance, however, depends on sustained engagement with traders’ unions.
Port Harcourt: Oil, Services, and Environmental Oversight
In Port Harcourt and the Niger Delta, tighter rules apply to oil and gas companies and their service providers. Environmental and emissions-related obligations are now more closely tied to tax reporting.
For residents, expectations remain high that improved revenue collection will translate into visible development.
Below is a clean, newsroom-ready section you can drop directly into the article under the city-impact part. It matches the tone and flow of the existing piece and is suitable for both a business newspaper and an SME blog.
How the Reforms Play Out Across Other Key Nigerian Cities and States
Beyond Abuja, Lagos, Kano, and Port Harcourt, the effects of the 2026 tax reforms are already being felt in other commercially and politically significant parts of the country. From the South-East’s trading hubs to agrarian northern states, implementation will reflect local economic structures and state capacity.
Enugu: Public Workers, SMEs, and the Service Economy
In Enugu, where the economy is driven largely by civil servants, SMEs, hospitality, and education services, the higher ₦800,000 personal income tax exemption provides immediate relief for junior public workers and low-income earners.
For small hotels, schools, consultancies, and retail businesses:
- The ₦25 million turnover exemption significantly reduces corporate tax pressure
- Presumptive taxation simplifies compliance for informal operators
- Reduced local levies under the Joint Revenue Board framework ease long-standing complaints about multiple taxation
The main challenge in Enugu remains tax education, as many small business owners are unaware that formalisation now comes with clear financial benefits.
Anambra: Traders, Manufacturers, and a Strong Informal Sector
In Anambra, particularly in Onitsha and Nnewi, commerce and manufacturing dominate. The reforms could have a transformative effect if properly implemented.
Key implications include:
- Market levies being consolidated, reducing harassment of traders
- Small manufacturers in Nnewi benefiting from SME tax exemptions and R&D incentives
- Improved clarity on VAT exemptions for essential goods
However, compliance may be uneven, as many businesses traditionally operate outside formal registration. Success in Anambra depends on cooperation between tax authorities and traders’ associations.
Delta State: Oil Services, Logistics, and SMEs
In Delta State, especially in Warri and Asaba, the tax reforms intersect with oil services, logistics, and SME activity.
Under the new regime:
- Oil servicing companies face stricter reporting and withholding obligations
- SMEs in logistics, catering, and supply services benefit from simplified taxation
- Environmental and operational compliance is more closely linked to tax reporting
Residents and business groups continue to demand transparency, insisting that increased tax collection must translate into visible development.
Kaduna: Manufacturing, Education, and Digital Compliance
Kaduna stands out as a northern industrial and educational hub. With manufacturing clusters and a growing tech ecosystem, the state is well positioned to adapt to digital tax administration.
Impacts include:
- Easier formalisation for startups and SMEs through NIN-linked tax IDs
- Consolidation of local levies affecting artisans and transport operators
- Stronger enforcement of PAYE for private schools and factories
Kaduna’s relatively advanced digitisation gives it an edge, but small traders still require targeted support.
Kebbi: Agriculture, Informal Trade, and Presumptive Taxes
In Kebbi State, where agriculture dominates, the reforms focus less on corporate taxation and more on simplified compliance.
Key outcomes include:
- VAT exemptions on agricultural inputs supporting farmers
- Presumptive taxes replacing ad-hoc levies in rural markets
- Minimal impact on subsistence farmers, many of whom fall below taxable thresholds
The challenge in Kebbi is not tax burden but access to information and digital tools, which will determine how smoothly the reforms are adopted.
What This Means Nationwide
Across Enugu, Anambra, Delta, Kaduna, Kebbi, and other states, the pattern is clear:
the 2026 tax reforms favour formalisation, simplicity, and scale, while gradually shrinking the informal space that has long defined Nigeria’s economy. For businesses and SMEs, location matters—but compliance, registration, and record-keeping now matter even more.
State Governments and the Revenue Balance
While the laws are federal, implementation depends heavily on state cooperation. VAT sharing, market levies, and enforcement powers remain politically sensitive, especially between northern and southern states. The Joint Revenue Board is expected to mediate disputes, but its effectiveness will shape taxpayer confidence.
Backlash, Legal Concerns, and Public Trust
The reforms have not gone unchallenged. Labour unions fear indirect inflationary effects, student groups have protested, and some lawmakers allege inconsistencies between legislative drafts and gazetted versions.
Tax professionals have also flagged issues around capital gains taxation during inflation and data privacy under NIN-linked systems. The NRS insists the reforms protect low-income Nigerians and expand fairness.
What Businesses and SMEs Should Do Now
- Register and update tax records early
- Maintain basic digital accounts
- Seek professional advice for multi-state operations
- Monitor updates from NRS and state revenue agencies
What to expect in the Future
If well implemented, Nigeria’s tax reforms could lift the tax-to-GDP ratio to 18 percent by 2030, reduce oil dependence, and stabilise public finances. But success will depend on trust, transparency, and visible public benefits.
For businesses and SMEs filing 2026 tax returns, the message is simple: the system is changing, and compliance now comes with clearer incentives—but also fewer hiding places.
