By Nkanu Egbe
As the clock strikes midnight tonight, ushering in January 1, 2026, Nigeria will technically transition into a new fiscal era. Yet, the airwaves are not filled with sensitisation campaigns, but with accusations of legislative fraud.
For the average business owner in Ikeja or the corporate executive on the Island, the noise from Abuja is deafening but distracting. While lawmakers trade accusations over “illegal insertions” and forged gazettes, the Nigeria Tax Administration Act 2025 is scheduled to become active law tomorrow morning.
The question on the streets of Lagos is no longer about the politics of the bill, but the reality of the burden. What actually changes when we wake up tomorrow?
The “Forgery” Distraction
The chaos reached a fever pitch over the last 48 hours. Lawmakers, including Reps Abdussamad Dasuki and Mansur Manu Soro, have alleged that the harmonised bill currently sitting on the President’s desk differs materially from what was debated in the chambers.
The allegations—ranging from surreptitious changes in revenue thresholds to the quiet expansion of the Revenue Service’s powers—have sparked calls from the PDP and Northern pressure groups to suspend implementation. However, without a court injunction or an executive order to pause, the machinery of the state moves forward.
The Real Deal: Who Pays?
Stripped of the political drama, the reforms introduce a “Robin Hood” approach to taxation—shielding the bottom while aggressively targeting the top.
1. The Shield for Small Business For the vast majority of MSMEs in Lagos, the news is surprisingly good. Under the new regime, businesses with an annual turnover of under ₦50 million are effectively exempt from Company Income Tax (CIT). The logic is simple: stop harassing the frantic chaos of the informal sector and focus on the “big fish.” If you run a small consultancy, a salon, or a corner shop, the tax man is technically legally required to look away from your profits, provided you are registered.
2. The Consumption Trap The government is betting big on consumption taxes. While income tax relief is given with one hand, VAT enforcement is tightened with the other. The philosophy is clear: If you can afford to spend, you can afford to pay. However, to cushion the blow, essential items—food, medical supplies, and educational materials—remain Zero-Rated.
The “Teeth” of the Law: Frozen Accounts, Not Handcuffs
Perhaps the most widespread fear is the rumour of a “militarized” tax force arresting defaulters. This is largely idle talk, but the reality is potentially more damaging for businesses.
The new Nigeria Revenue Service (NRS) has been stripped of direct police powers—they cannot arrest you. However, they have been handed a far more potent weapon: The Administrative Freeze.
Under the new Administration Act, the NRS can instruct banks to freeze the accounts of suspected defaulters and confiscate proceeds deemed to be from tax evasion—all without a prior court order. The penalties for non-compliance are equally draconian:
- ₦5,000,000 fine for failure to register for a Tax ID.
- ₦20,000,000 fine for ignoring a summons or notice from the NRS.
The Lagos Angle
For Lagos State, the stakes are highest. The controversy over the “derivation principle” regarding VAT sharing is essentially a battle over Lagos’s wealth. The new reforms favour a model where VAT remains closer to where it is generated. For the Lagos State government and its residents, this could mean more retained revenue for infrastructure, but it also paints a target on the back of every Lagos-based multinational to ensure 100% compliance.
As January 1 dawns, the “idle talk” in Abuja will likely continue. But for the Lagosian, the smart move is to ignore the drama and look at the ledger. The era of flying under the radar is over. You won’t be arrested for owing tax, but you might wake up to find your bank app frozen.
