Chief Economist at SPM Professionals, Dr Paul Alaje, has described Nigeria’s newly enacted tax legislation as a major shift in the country’s fiscal framework, saying it provides clearer structure for tax administration, taxpayer obligations, and revenue coordination.
Alaje spoke while delivering the keynote address at the 14th anniversary lecture of the January 9 Collective (J9C), a multidisciplinary network of Nigerian professionals, held on Friday in Lagos. The lecture focused on the early impacts and emerging challenges of the federal tax legislations, commonly referred to as the Tax Reforms.
The annual lecture was themed, “Nigeria Tax Reforms Act 2025: Early Realities, Emerging Challenges and the Road Ahead.” Policymakers, private sector leaders, and traditional authorities were in attendance to review the reforms and their initial effects.
Explaining the choice of theme, Kingsley James, Captain of the January 9 Collective, said the discussion was driven by the need for “informed, balanced, and practical conversations” as Nigeria adjusts to wide-ranging fiscal changes.
He said, “The new tax law recently signed by President Bola Ahmed Tinubu, introduces important reforms in revenue generation and administration. Its impact on businesses, as well as our collective responsibilities, will be the focus of today’s engagement.
“I am confident that by the end of this session, we will have a clearer understanding of the law, our roles, and its implementation, free from any controversies that may have surrounded its signing or early execution.
“As a collective, we are committed to sustaining this initiative into the future. To achieve this, we seek collaboration and support in every possible way.”
In his keynote, Alaje described the legislation as “a landmark fiscal reform that is commendable.”
“This is one of the best decision that has been taken after independence. We appreciate the president for taking that decision,” he said.
He explained that the new framework clarifies the roles of tax authorities across federal, state, and local levels, while also defining taxpayer rights and obligations.
“So, the Nigerian tax administration has provided a comprehensive framework for tax administration and enforcement in Nigeria. We find the various responsibilities of tax authorities. Before now, people were not sure as to what are the, we know what tax authorities do across state and federal, as well as local governments,” he said.
According to him, the law sets out procedures for tax assessment, collection, and dispute resolution, while aiming to improve compliance, transparency, and efficiency in tax processes.
Alaje said one of the key changes was the consolidation and harmonisation of multiple tax laws under a single framework.
“Unlike where you have all kinds of taxes, over 50 of them, because it is the tax act that harmonizes all of them that we can say we have tax act that are just for and we can work with all of this,” he said, adding that the law clearly specifies types of taxes and who is responsible for paying them.
He also highlighted the formal establishment of the Nigerian Revenue Service as a central revenue collection body, replacing the former structure of the Federal Inland Revenue Service.
“From that it is important for that to formally establish the FIRS, which is now known as Nigerian Revenue Service, as a central revenue collection. It discusses what their structure, what their governance system should be, and so on and so forth,” he said.
Alaje further explained provisions relating to joint revenue coordination among federal, state, and local governments, as well as distinctions between direct and indirect taxes.
On personal income tax, he clarified that it is payable to the state of residence and outlined who is required to pay, including employees, employers, partners, and the self-employed.
He said, “The law says you pay as state of residence where you live. That’s with that organization. That’s the state that you pay. It’s the law. That’s what is stated.”
He also explained collection methods such as pay as you earn and direct assessment, and noted increased integration of financial data systems in tax administration.
Addressing tax thresholds and rates under the 2025 framework, Alaje said incomes up to N800,000 per annum attract zero percent tax, with graduated rates applied to higher income bands.
“So on your income, the first 800,000 you are paid, you are paying zero percent,” he said, before outlining the subsequent tax bands and applicable rates.
He added that the previous tax structure had been compressed under the new law and drew attention to consolidated relief allowances and compliance requirements, including penalties for default.
The panel session featured Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise; Elizabeth Olaghere, Partner at KPMG Tax, Regulatory and People Services; Segun Ajayi Kadir, Director General of the Manufacturers Association of Nigeria; and Muktar Mohammed, CEO and founder of several financial initiatives.
Traditional authority was represented by Oba Saheed Elegushi, the Elegushi of the Ikate Elegushi Kingdom, through Lekan Bakare, the Aro of Ikate. The event was hosted by comedian Gbenga Adeyinka.
The Tax Reforms Act 2025 is part of the federal government’s broader effort to expand the tax base, reduce leakages, and improve coordination among revenue authorities, amid ongoing debates by businesses and professionals on implementation challenges and economic impact.
