By Atoyebi Nike
The Federal Government has signed a new tax reform law to take effect from the 2026 fiscal year, introducing significant changes to Nigeria’s personal and corporate income tax regimes.
Under the new law, individuals earning below N800,000 annually will not be subject to personal income tax, while companies with a turnover under N100 million will be exempt from Company Income Tax.
Taxpayers can claim deductions of 20% of rent paid, up to N500,000, along with deductions for contributions to pension, life insurance, housing, and health schemes. However, these deductions will no longer be applied automatically; taxpayers must file individual returns to access them.
All taxpayers are required to file returns regardless of income level. Section 29 of the Act empowers the tax authorities to assess individuals under a presumptive tax regime if proper records are not kept.
The reform aims to widen the tax net and modernize compliance processes. Income in bank accounts will not be taxed automatically; instead, taxes will apply to net profits and interest earned.
