President Bola Tinubu has signed a sweeping tax reform into law, exempting several items from the 7.5% value-added tax (VAT).

The Nigeria Tax Act, part of four major fiscal bills signed on June 26, 2025, is designed to reduce the cost burden on citizens and stimulate growth in strategic sectors.

Four new fiscal laws now been enacted

The law is expected to take effect on January 1, 2026, and will be implemented by the newly established Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service.

The reform package includes:

Nigeria Tax Administration Act
Joint Revenue Board (Establishment) Law
Nigeria Revenue Service (Establishment) Act
Nigeria Tax Act

Among these, the Nigerian Tax Act introduces a significant shift in VAT structure, carving out exemptions and zero-rated items across industries.

New VAT exemptions aim to ease costs

According to a document obtained by TheCable, 15 items have been fully exempted from VAT, while 19 more will be taxed at 0%, giving them a similar effect without full exemption.

Exempted items include:

Sanitary pads and tampons
Diesel fuel
Land transactions
Compressed natural gas (CNG)
Liquefied petroleum gas (LPG)
Electric vehicles
Cooking stoves for clean energy
Renewable energy equipment
Oil, gas sector receives special relief

This tax shift builds on the October 2024 VAT Modification Order, which had already provided exemptions for:

Feed gas for industrial use
Liquefied natural gas (LNG) infrastructure
Conversion kits for CNG and LPG
Installation and conversion services for gas systems

These exemptions are meant to support Nigeria’s energy transition and local manufacturing capacity.

Some items need ministerial approval

While the Act outlines exempted and zero-rated items, it also leaves room for flexibility.

The Minister of Finance can issue an official gazette either to commence VAT collection or suspend it temporarily in the public interest.

This gives the government a legal mechanism to adjust tax policies based on economic or political conditions.

Fiscal reform targets sustainable development

Chairman of the presidential committee on fiscal reform, Taiwo Oyedele, said these changes aim to create a fair, simple, and efficient tax system.

Reducing VAT on essential goods, he added, will bring relief to average Nigerians and make the business environment more competitive.

With rising living costs and energy challenges, the exemptions could not have come at a better time for struggling households and industries alike.

Nigeria, Dutch government renegotiate outdated tax laws

Legit.ng earlier reported that the Executive Chairman of the Federal Inland Revenue Service, Dr. Zacch Adedeji, hosted a delegation led by His Excellency Bengt van Loosdrecht, Ambassador of the Kingdom of the Netherlands to Nigeria, for the opening ceremony of the renegotiation of the Double Taxation Agreement between Nigeria and the Netherlands.

The event took place at the Revenue House in Abuja on Monday, July 7, 2025, and marked the beginning of a new phase in Nigeria’s international tax relations.

Following the signing of the Tax Reform Bill into law by President Bola Ahmed Tinubu (GCFR) on June 26, 2025, interest in Nigeria’s new tax structure has already started to grow.