By Omodele Adigun
High-income earners in Nigeria will now contribute progressively more under the country’s new tax reforms, paying up to 25 per cent of their income – a rate still lower than Ghana’s 35 per cent and South Africa’s 45 per cent.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, clarified during an interactive session in Lagos.
Oyedele explained that the reforms are designed to ease the burden on low- and middle-income earners while ensuring fairness across the system. “Our objectives from the very beginning have been clear – reduce the tax burden on the masses, harmonise and simplify tax rules to address the multiplicity of taxes, and promote a modern, business-friendly and globally competitive tax system. Our approach is people-centric, growth-focused, and efficiency-driven,” he said.
While the legislation does not specify professions or individuals, it sets clear income thresholds. From an economic perspective, high-income earners are individuals with annual earnings from N5 million to N20 million and above. Under the new regime, those in this category will fall within the top tiers of the progressive Personal Income Tax (PIT) structure, with the highest bracket of 24–25 per cent applied to annual earnings above N3.2 million.
Additional tax obligations are also triggered by their broader financial activities. For instance, capital gains above N10 million attract a 10 per cent Capital Gains Tax (CGT), while certain non-resident services are subject to a 5 per cent Withholding Tax (WHT). New provisions, such as the Controlled Foreign Company (CFC) rules, extend compliance to individuals with offshore assets or cross-border business interests.
High-income earners are generally characterised by substantial disposable income, ownership of high-value assets such as real estate and equities, and frequent engagement in large-scale financial transactions. The government’s aim, Oyedele noted, is to ensure that those with greater financial capacity contribute proportionately more to national revenue, thereby strengthening fiscal sustainability and driving inclusive economic growth.
Key measures in the new tax laws, according to Oyedele, are Personal Income Tax (PIT) under which Workers on minimum wage and low-income earners remain exempt. Average earners will pay less, while only the top 3 per cent of high-income earners face the 25 per cent rate. The Value Added Tax (VAT), which exempts rent and transportation and food, education, and healthcare, remains zero-rated. Small businesses are not required to charge VAT.
Others are Tax Identification (Tax ID), which is mandatory only for business accounts, while small companies with an annual turnover of ₦100 million or less remain exempt from corporate income tax, VAT, and withholding tax, the harmonisation of over 60 different levies to fewer than 10, and the suspension of several controversial charges, such as the 5 per cent levy on airtime and data, the cybersecurity levy on transfers, and excise taxes on vehicles.
He also explained that the framework does not impose fresh obligations on previously exempt individuals. Income from influencers, digital platforms, and virtual assets has always been taxable but is now guided by clearer provisions.
Oyedele stressed that the reforms are not about raising taxes but about simplifying and modernising the system. He added that businesses stand to benefit from cost savings, harmonisation, faster refunds, and an anticipated cut in corporate tax rates, while small enterprises remain shielded from most obligations.
He urged Nigerians to rely on credible information sources rather than misinformation, saying, “These reforms are designed to benefit all Nigerians. Let us work together to ensure effective implementation and position ourselves for the better days ahead,” he concluded
Thanks for addressing this topic—it’s so important.
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