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The Federal Inland Revenue Service (FIRS) has said Nigeria’s sweeping new tax reforms will exempt essential sectors including food, education, agriculture, and shared transportation from value-added tax (VAT), in what it described as the most significant fiscal transformation since independence.

The Executive Chairman of the FIRS, Zacch Adedeji, disclosed the reforms during an interview marking his two years in office. He credited President Bola Tinubu for fulfilling his campaign pledge to simplify tax compliance and eliminate hurdles faced by businesses and citizens.

“With these new laws, food, education, transport, and agriculture will be VAT-free,” Adedeji said. “The President has fulfilled his promise to make businesses flourish by removing burdens and hurdles. This is the best thing that has happened to Nigeria’s fiscal ecosystem since 1960.”

The reforms consolidate multiple tax laws into a single code, scheduled to take effect in January. Under the new framework, the number of tax types will be reduced to single digits, thresholds for personal income tax adjusted to protect low-income earners, and businesses with turnover below ₦50 million exempted from tax.

President Tinubu signed four major pieces of legislation into law on June 26, 2025—the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act. Collectively known as the Tax Acts quartet, they are designed to broaden Nigeria’s tax base, improve compliance, and strengthen transparency at all levels of government.

Adedeji noted that the reforms are already producing results, with Nigeria’s tax-to-GDP ratio rising from 10 per cent to 13.5 per cent in just two years. The country is now targeting 18 per cent by 2027. In August, allocations from the federation account reached a record ₦2 trillion, nearly 70 per cent of which came from taxes collected by the FIRS.

Improved fiscal stability, he added, has enabled 30 states to repay ₦1.85 trillion in debts within 18 months, while debt servicing costs have dropped from about 90 per cent of revenue to roughly 50 per cent. External reserves have also been strengthened on the back of higher tax inflows.

As part of the overhaul, the FIRS will be renamed the Nigeria Revenue Service to reflect its role as a central tax authority for all tiers of government. “The word ‘federal’ gave the wrong impression that we only collect for the federal government,” Adedeji said. “In reality, we collect VAT, of which 90 per cent belongs to the states.”

He further linked the buoyancy of the federation account to Tinubu’s broader economic policies, including the removal of fuel subsidies and unification of exchange rates. “The health of the federation account has blossomed greatly, as there are no bogus subsidy claims to deplete the pool,” he said.

Acknowledging public concerns, Adedeji likened the transition to “the pain of a woman in labour,” while insisting that government interventions—such as compressed natural gas buses and crude-for-naira support for local refiners—are already cushioning the impact of reforms, with fuel prices beginning to ease.

On fears over a petrol surcharge included in the new code, he clarified that the levy would not apply automatically. “It will only take effect if activated by a ministerial order and published in the official gazette,” he said.

The FIRS boss stressed that the restructured tax law will improve compliance, reduce evasion, and create a more taxpayer-friendly environment. “We are service providers to taxpayers rather than just an enforcement agency,” he explained.

Adedeji concluded by urging citizens and businesses to embrace the reforms: “When companies are doing well, expanding, and making profits, we will benefit from their growth. Our task is to remove hurdles in their way, and that is what the president has done with these new laws.”