Presidential Fiscal Policy and Tax Reforms aim to simplify taxes, lower costs, boost competitiveness, and incentivize industrialisation across Nigeria.
Nigeria’s manufacturing landscape is poised for a major transformation following the unveiling of the Presidential Fiscal Policy and Tax Reforms, which seek to harmonise taxes, reduce business burdens, and incentivise industrial growth. The Manufacturers Association of Nigeria (MAN) hosted a high-level Hybrid Stakeholders’ Engagement at MAN House, Ikeja, Lagos, featuring Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
The event, titled “From Legislative Assembly to Factory Floor: What the New Tax Laws Mean for Nigerian Manufacturers,” brought together policymakers, industry leaders, and investors to examine how the new legal framework will affect businesses, households, and the overall economy.
A Broken Tax System Gets Overhauled
Oyedele explained that Nigeria’s tax system has long been fragmented, complex, and inequitable, creating a high compliance burden for businesses while discouraging investment.
“The reforms are designed not merely to collect taxes but to promote fairness, economic growth, transparency, and ease of doing business,” he said. “We aim to ensure that every compliant business benefits from certainty in tax treatment and a level playing field.”
The Committee emphasised that the reforms are part of a broader fiscal strategy to stabilise the macroeconomy, attract investors, and modernise tax administration through digitalisation, risk-based audits, and real-time reporting.
Key Tax Reforms Affecting Manufacturers
The new laws introduce several structural changes that directly impact manufacturers:
Companies Income Tax (CIT): Small and medium-sized enterprises (SMEs) will now enjoy a zero percent CIT, simplified returns, and a more business-friendly capital allowance regime. The standard CIT rate is scheduled to drop from 30% to 25%, strengthening Nigeria’s global competitiveness.
Withholding Tax (WHT): Manufacturers now benefit from exemptions and reduced rates, along with taxpayer-issued credit notes, easing cash flow pressures and encouraging formalisation.
Value Added Tax (VAT): Companies can claim input VAT on assets and services, with a faster VAT refund process and clear self-accounting and withholding mechanisms. VAT may also be suspended on petroleum products, CNG, LPG, and renewable energy equipment.
Capital Gains Tax (CGT): CGT has been integrated into the income tax regime, with exemptions for share disposals up to ₦150 million and gains under ₦10 million annually.
Tax Ombud: An independent Tax Ombud will serve as a watchdog for taxpayers, resolving disputes and preventing arbitrary taxation.
Economic Development Incentives for Key Sectors
The Economic Development Incentive Scheme (EDIS) targets sectors critical to industrialisation, job creation, and self-sufficiency. Incentives are tied to minimum investment thresholds and sunset periods ranging from 10 to 20 years. Key sectors include:
Agriculture & Food: Aquaculture, crop production, dairy, forestry (₦30m – ₦500m, 15–20 years)
Energy: Refining, electrical equipment, renewable energy (₦5B – ₦100B, 12–20 years)
Mining & Quarrying: Coal, metal ores, lithium, rare earths (₦5B – ₦10B, 20 years)
Health: Manufacturing medical/dental equipment (₦5B, 20 years)
Steel & Metals: Basic metals, iron and steel production (₦5B, 12–15 years)
Textiles & Leather: Sportswear and textiles (₦500M – ₦2B, 12–20 years)
Industrial Machinery: Agricultural, forestry, and general-purpose machinery (₦5B – ₦10B, 10–15 years)
Additional incentives include R&D deductions capped at 5% of turnover, VAT zero-rating on fertilizers and agricultural chemicals, and exemptions for locally manufactured essential goods like sanitary products and disability-related devices.
Addressing Manufacturers’ Concerns
During the engagement, MAN members raised pressing issues:
Multiplicity of taxes across federal, state, and local governments
High cumulative tax burdens impacting profitability, investment, and job creation
Inconsistent WHT exemption implementation
Delays in VAT refund processing for exporters and capital-intensive companies
Policy uncertainty and discrepancies between gazetted and National Assembly-approved tax laws
Import duties on raw materials that raise production costs
Removal of income tax exemptions for exporters, affecting profitability
Oyedele assured stakeholders that the Committee is actively resolving these issues, ensuring legal clarity, harmonised implementation, and predictability in tax administration.
Implications for Investment, Households, and Growth
The reforms are expected to:
For businesses: Reduce tax risks, lower overall tax burden, accelerate refunds, provide input VAT credits, and offer long-term incentives for industrial expansion.
For households: Offer wage relief, transport subsidies, VAT zero-rating on essentials, and tax breaks for investment income.
For government: Improve tax-to-GDP ratios, optimise revenue collection, strengthen fiscal sustainability, and enhance non-oil revenue performance.
Readiness and Implementation
MAN members were advised to adopt a holistic readiness plan, focusing on people, processes, technology, and execution. Capacity building, automation of compliance, and proactive engagement with regulators are critical to maximise benefits and avoid unintended penalties.
The Road Ahead
Nigeria’s new tax framework aims to transform the manufacturing sector, incentivise investment, and drive inclusive economic growth. By aligning legislative reforms with factory-floor realities, policymakers hope to create an environment of equity, competitiveness, and simplicity, paving the way for a stronger industrial base and shared prosperity.
Explore how Nigeria’s 2026 tax reforms will reshape the manufacturing sector, offering lower tax rates, VAT relief, exemptions, and investment incentives to boost industrial growth, attract investors, and drive economic development.
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