The Nigerian Senate on Monday passed the long-awaited Tax Reform and Revenue Mobilisation Act in a 73–12 vote that analysts are calling the most consequential fiscal legislation in a generation. The bill, which had been debated for over 14 months, overhauls the country's value-added tax framework, introduces a progressive digital services levy, and restructures corporate income tax bands for the first time since 2011.

What the bill changes

Under the new framework, the standard VAT rate will increase from 7.5% to 10% beginning January 2027, while essential goods including food, medicine, and educational materials will remain zero-rated. Technology companies with annual Nigerian revenues exceeding ₦500 million will face a new 3% digital services surcharge.

"This is the reform Nigeria has needed for two decades. The question was never whether to do it — it was whether we had the political will." — Senate President Godswill Akpabio

The legislation passed with bipartisan support, with 14 senators abstaining. Opposition lawmakers who voted against the bill cited concerns over implementation timelines and the potential impact on small businesses in the informal economy, which accounts for an estimated 57% of Nigeria's GDP.

Reactions from business community

The Lagos Chamber of Commerce and Industry welcomed the passage but urged the Federal Inland Revenue Service to publish implementation guidelines within 90 days. "The devil is always in the details," said LCCI Director-General Dr. Chinyere Almona. "We need clarity on the digital services levy before companies can begin compliance planning."

The Manufacturers Association of Nigeria expressed cautious optimism, noting that the reduction in corporate income tax from 30% to 25% for large companies would free up capital for reinvestment. Small businesses with annual turnover below ₦25 million are fully exempted from the new regime.

Implementation timeline

The bill now heads to President Tinubu for assent. Presidential spokesman Ajuri Ngelale confirmed the President would sign it within two weeks. The FIRS has been directed to begin systems upgrades immediately to handle the new tax categories.

The VAT increase takes effect January 1, 2027, giving businesses 18 months to prepare. The digital services levy will apply from April 2027, aligned with the next fiscal year for most multinational companies operating in Nigeria.