One month after the new reforms took effect, the system is clearly in transition. The government has set bold revenue targets and tightened enforcement. But businesses are adjusting, informal workers are wary, and public trust remains fragile.
The newly reconstituted Nigeria Revenue Service (NRS) is targeting N40.71 trillion in revenue for 2026, a 44 percent jump from the N28.3 trillion collected in 2025. Its mandate has expanded to include petroleum and mineral royalties, significantly widening its reach.
The big question after month one is simple: who is winning and who is feeling the pressure?
The most immediate impact is in the formal sector, especially through the rollout of real-time e-invoicing.
Under the new system, VAT-registered businesses must generate and validate invoices digitally. Each invoice carries a verification code and timestamp, and transaction data flows directly to tax authorities.
The goal is to reduce VAT leakages and improve transparency. But for many firms, implementation has not been smooth.
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Although onboarding began months ago, readiness gaps remain. Of over 5,000 large taxpayers required to integrate, only about 1,000 had commenced integration by the deadline.
“Integration is not trivial, especially for firms with legacy systems,” said tax-technology expert Ayodapo Bamidele.
For the informal sector, change has been cautious, and even policymakers acknowledge limits. Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has noted that most informal workers operate at the subsistence level and aggressive taxation could worsen poverty.
The real issue has been duplication; informal workers already pay market levies, union dues, and local charges. Adding formal taxes on top of these has raised fairness concerns.
“If citizens are encouraged to enter the formal tax net, the government must ensure they are not simultaneously subjected to informal levies that often cost more,” said Oluwadamilare Oladele, managing director of a Lagos-based fintech firm.
So far, month one shows that the informal sector cannot be treated as a quick revenue solution. Enforcement without trust may deepen resistance rather than improve compliance.
Workers: modest relief
For salary earners, the reforms have brought visible benefits.
The annual tax-free threshold has been raised to N800,000. Workers earning around N66,700 per month are now exempt from PAYE.
Some employees report slightly higher take-home pay. HR professionals say a majority of workers in some firms paid less tax in January compared with December.
A new rent relief also allows taxpayers to deduct 20 percent of annual rent, capped at N500,000, from taxable income.
For low- and middle-income earners, this is one of the clearest wins in month one.
Companies: incentives redesigned
Corporate tax incentives have also been reshaped.
The old open-ended tax holidays have been replaced with the Economic Development Incentive (EDI), which links benefits to verified capital expenditure. Eligible firms can receive tax credits tied directly to investment.
Tax advisers say some companies are restructuring operations to qualify.
The redesign signals a shift: government wants incentives tied to measurable investment rather than broad exemptions.
Read also: NRS sees 44% revenue jump as tax overhaul takes shape
Trust remains the biggest risk
While enforcement is tightening and systems are modernising, public trust remains low.
Survey data compiled by SBM Intelligence shows that more than two-thirds of respondents distrust the government’s use of tax revenues. Only a minority believes the reforms will benefit the country.
This presents a structural challenge. Compliance depends not only on digital systems and legal powers, but on taxpayer confidence.
Without visible improvements in public services, higher collection targets may deepen skepticism
The reforms are ambitious, and enforcement is firming. But the real test will come as SMEs onboard fully and informal taxation expands.
Month one shows momentum but also friction. Whether this becomes a lasting structural shift or another cycle of compliance strain will depend less on the law itself and more on clarity, coordination, and public trust.
