FIRS to NRS: 9 Things Nigeria’s New Tax System Means for You

Nigeria’s tax landscape is undergoing a major shake-up. With President Bola Tinubu signing four significant tax reform bills into law including the Nigeria Revenue Service (NRS) Bill, the country is officially replacing the long-standing Federal Inland Revenue Service (FIRS). 

But beyond the name change, what does this mean for everyday Nigerians? Here are nine key changes you should know about:

FIRS Is Now NRS

The Federal Inland Revenue Service (FIRS) has been rebranded as the Nigeria Revenue Service (NRS). It’s not just a cosmetic change, the new agency is expected to operate more efficiently, with broader powers and a stronger digital backbone to simplify tax processes.

One-Stop Revenue Collection

Instead of having different agencies collect different taxes, the NRS will now take charge of all federal tax collections. That includes taxes previously handled by agencies like Customs, the Nigerian Ports Authority, and the Nigerian Upstream Petroleum Regulatory Commission. This move is meant to reduce duplication and improve coordination.

No Income Tax for Low-Earners

If you earn ₦800,000 or less in a year, you won’t have to pay personal income tax anymore. This is a big win for low-income workers, artisans, and many small earners who previously struggled with tax compliance.

Big Earners Will Pay More

Those earning over ₦50 million annually will now be taxed at 25%, instead of the regular rate. This is a move to ensure the wealthiest Nigerians contribute more to national development.

Tax Break for Small Business Owners

If you run a small business, there’s good news: you’re now fully exempt from income tax. This reform is aimed at boosting small-scale enterprises and easing the cost of doing business.

Lower Corporate Tax Is Coming

For medium and large businesses, the company income tax rate will drop from 30% to 25%, but not immediately. This reduction is expected to take effect in 2026, giving companies a bit of breathing room and hopefully encouraging more investment.

No VAT on Essentials

Some everyday items and services have now been officially made VAT-free. This includes food, electricity, school fees, pharmaceutical products, and medical services, a big relief for households already dealing with inflation.

No New Tax Increases (Yet)

There’s no change to the VAT rate, which stays at 7.5%, and no hike in corporate tax for now. So, while reforms are happening, the government isn’t raising the tax burden across the board.

New Development Levy Introduced

A 2% to 4% Development Levy has been introduced to fund key national institutions like TETFund, NITDA, NASENI, and the Student Loan Fund (NELFUND). It’s a new form of tax, but one the government says is focused on national growth and innovation.