The Federal Inland Revenue Service (FIRS) has confirmed that Food, school fees, transport, and farming will no longer attract value-added tax (VAT) under President Bola Tinubu’s new tax reforms
The Executive Chairman of FIRS, Zacch Adedeji, made the announcement in an interview to mark his two years in office. He said the reforms are part of Tinubu’s plan to simplify taxes and reduce the pressure on individuals and businesses.
“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 all burdens and hurdles. This is the best thing that has happened to Nigeria’s fiscal ecosystem since 1960.”
What the new law covers
The new tax code, which kicks in from January, brings together several tax laws into one and cuts the number of tax types to single digits. It also:
exempts businesses earning below ₦50m annually from tax,
adjusts thresholds for personal income tax to shield low-income earners, and
simplifies tax filing for individuals and businesses.
In June 2025, Tinubu signed four laws, Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and Joint Revenue Board Establishment Act—collectively called the Tax Acts quartet. The aim is to broaden Nigeria’s tax base, improve compliance, and boost transparency.
To lead the process, Tinubu appointed Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, as chair of the Presidential Committee on Fiscal Policy and Tax Reforms. The committee brings together experts from both government and the private sector.
Early results
Adedeji said the reforms are already paying off. Nigeria’s tax-to-GDP ratio has gone up from 10 per cent to 13.5 per cent in two years, with a target of 18 per cent by 2027. He also revealed that 30 states have repaid ₦1.85tn in debts over the past 18 months, while debt servicing costs dropped from 90 per cent to about 50 per cent of revenue.
He added that the FIRS will now be renamed the Nigeria Revenue Service to reflect its expanded role. “The word ‘federal’ gave the wrong impression that we only collect for the federal government,” he explained. “In reality, we collect VAT, of which 90 per cent belongs to the states.”
More than just VAT cuts
Adedeji credited Tinubu’s wider economic steps, such as subsidy removal and exchange rate unification with improving the health of the federation account. “The health of the federation account has blossomed greatly, as there are no bogus subsidy claims to deplete the pool,” he said.
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He admitted, however, that the reforms have brought short-term pain. “The pain of a woman in labour,” he described it. Government measures like compressed natural gas buses and crude-for-naira deals for local refiners, he said, are helping to soften the impact.
What it means for taxpayers
The new framework also restructures tax administration. Taxpayers are grouped into small, medium, and large categories, with one-stop shops created for filing and payments. “We are service providers to taxpayers rather than just an enforcement agency,” Adedeji explained.
On the proposed petrol surcharge, he clarified: “It will only take effect if activated by a ministerial order and published in the official gazette.”
He urged Nigerians 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.”