Nigeria’s New Tax Laws: Reform to Tax What?

By Nick Agule
New tax laws promise reform, but without reforms in power, security, infrastructure, and fiscal discipline, risk taxing an empty economy!

Nigeria entered 2026 with sweeping new tax laws, celebrated as a landmark overhaul of fiscal legislation. Yet controversy quickly followed. Allegations surfaced that the version signed by the President differs from the gazetted copy. These are weighty claims that demand reconciliation, not dismissal. Aligning the President’s signed text with the gazetted version should be straightforward, but some argue suspension is impossible once a bill is signed. Curiously, the President did defer implementation until January 1, 2026. If such deferral was possible, why not extend it further until the controversy is resolved? Legally, repeal by the National Assembly is the proper route – but repeal in favour of what? That question belongs to constitutional experts. For now, let us focus on the usefulness of the laws themselves.

Taxes Matter, But They’re Not Everything

Taxation influences investment decisions but rarely dominates them. The oil sector is a telling example: for decades, government take hovered around 85%, yet investment flowed because fundamentals were strong. Ironically, now that the burden has dropped to about 50%, investors are leaving. The lesson is clear – tax rates matter, but they are seldom decisive.

Ask Nigerian manufacturers about their biggest constraints, and taxation will not top the list. Energy costs and unreliability dominate. It is difficult to imagine a serious industrial economy running on barely 5,000MW of grid power and expecting manufacturers to obsess over tax rates. This is where government strategy falters – assuming that elegant tax reforms alone can unlock prosperity.

What exactly are these laws taxing? Nigeria’s $250 billion economy is equivalent to the output of just 3 million people in Qatar. If Nigeria’s 200 million citizens produced at the equivalent of Qatar’s per-capita output, the economy would approach $14 trillion. Apply these tax laws to just 10% of that, and Nigeria would truly arrive. But without productivity, taxation is a hollow exercise.

Energy, Infrastructure, Security and the Bigger Picture

The urgent question is not taxation but energy security. The power sector remains crippled: TCN acts like a bloodclot in the arteries, blocking progress, DISCOs are in receivership, GENCOs drain government resources, refineries barely function, and gas continues to be flared. Without fixing energy, tax reform is a magic wand waved over an empty stage.

Manufacturers also grapple with:

• Regulatory uncertainty and weak rule of law
• High cost of capital, where monetary policy rates bite harder than corporate tax
• Poor infrastructure, making logistics painfully expensive and inefficient
• Dependence on imports, with little support for agriculture, steel, or reliable fuel supply
• Physical insecurity and skills gaps, worsened by the “japa” exodus and inflation-driven weak consumer demand

Tax reform must, therefore, be matched by reforms in energy, security, infrastructure, education, and governance. Fix these fundamentals, and Nigeria could raise CIT to 35–40% and still attract investment. The UK, for instance, thrives with a 25% CIT, 20% VAT, and fuel duties near 60%.

Taxation sits at the end of the value chain. If inputs are suffocated, outputs cannot grow. Reform must begin at the foundation.

Leakages and Fiscal Discipline

Even if tax revenues rise, what happens to them? Pouring water into a leaking bucket is futile. Nigeria should first fix its battered public treasury before increasing inflows. Yet, with the largest cabinet in history, fiscal discipline remains elusive. Instead, accusations of officials siphoning millions abroad persist – robbing the poor to subsidise the wealthy.

Subsidy removals in fuel, forex, and electricity follow the same troubling pattern. Citizens pay more, federation account revenues swell from N600 billion to over N2 trillion monthly, yet spending remains opaque, controlled by just 37 men – the President and 36 governors. Worse, the CBN has uncovered links between federation disbursements and dollar purchases, suggesting systemic leakage at the core of the economy.

One-legged reforms, as Prof. Abraham Nwankwo warns, cannot make the frog leap. Nigeria must be honest with itself.

Lessons from Qatar

Contrast Nigeria with Qatar, a desert nation of 3 million people. Strategic investments in industry (mainly oil and gas), services (finance, real estate, tourism, transportation, education, healthcare etc) unlocked prosperity:

• Qatar shares the world’s largest gas field with Iran with 1,800 trillion cubic feet of gas and 50 billion barrels of condensate.
• 9,000MW of power for 3 million citizens (versus Nigeria’s 5,000MW for 200 million)
• Qatar Airways ended 2025 with a fleet of 292 aircraft, revenues of $23 billion dollars and 43 million passengers flown. Qatar Airways alone generated almost the same revenues with Nigeria! Nigeria lacks a national carrier or flag carrier.
• Qatar’s productivity has resulted in near-zero unemployment rate and 1.3% inflation rate, MPR at 3.85% stable currency (3.65 riyals to a US dollar), high life expectancy at over 80 years, strong SDG performance.

Qatar proves that prosperity comes from strategic investment in fundamentals, not taxation alone.

A Call for Broader Reforms

President Tinubu, in his 2026 New Year address, pledged continued investment in modernising Nigeria’s infrastructure – roads, power, ports, railways, airports, pipelines, healthcare, education, and agriculture. Yet, with a federal budget of just $40 billion that is scarcely fully funded, such ambitions risk remaining aspirational rather than achievable. To bridge this gap, Nigeria must attract private sector capital, and the government must focus on creating the right enabling environment to unlock the true catalysts of growth.

Tax reform is commendable, but without parallel reforms in these sectors, it is a misplaced priority. Nigeria needs world-class reforms in energy, infrastructure, and governance to complement taxation. Only then will the country attract investment, create jobs, and unlock prosperity.

For my part, I would strongly support Dr. Taiwo Oyedele to lead reforms in the power sector – the beating heart of any economy, Nigeria’s included.

Nick Agule is an energy expert and public affairs analyst

Email: nick.agule@yahoo.co.uk
X: @NickAgule
Facebook: Nick Agule, FCA
02.01.2026