In a major push to overhaul Nigeria’s tax system, the Federal Government has introduced sweeping changes under the newly signed 2025 Tax Reform Act.
Newsonspot reports that one of the most significant provisions is the mandatory reporting by commercial banks of all customer accounts with monthly transactions exceeding N5 million. This directive, issued by the National Orientation Agency (NOA), aims to promote financial transparency and curb tax evasion.
As outlined in Section 30 of the Act, the policy is targeted at capturing more taxable income, particularly from high-net-worth individuals and players in the informal sector. Analysts say this measure could boost the Federal Inland Revenue Service (FIRS)’s capacity to track undeclared earnings and improve revenue collection.
While targeting transparency at the top, the reform also brings relief for lower-income Nigerians. The personal income tax threshold has been raised from N500,000 to N800,000 annually (or N66,667 monthly), exempting more Nigerians from paying tax. This move is expected to reduce the financial burden on low- and middle-income earners, especially in the face of rising living costs.
The Act also introduces protective exemptions:
Section 31: Capital gains from selling a primary residence are now tax-free.
Section 50: Up to N10 million in compensation for job loss, injury, or defamation is also exempt from tax.
Additionally, the VAT revenue sharing formula has been restructured. From 2026:
Federal Government share drops from 15% to 10%
States increase from 50% to 55% (shared based on equity, population, and consumption)
Local Governments retain their 35% share
This change is expected to incentivize economic productivity and internal revenue generation, particularly in consumption-heavy states like Lagos and Rivers.
Experts are applauding the reforms for prioritizing transparency and fairness. However, privacy advocates and financial institutions are urging the government to implement strong data protection protocols to safeguard customers’ financial information.
With implementation slated for 2026, all eyes will be on how these reforms reshape tax compliance, revenue growth, and economic behavior across Nigeria.
