Oyedele Assures Workers Of Relief, Clarifies New PAYE, Remote Work Rules

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has outlined key provisions and implementation guidelines of Nigeria’s newly enacted Tax Reform Acts, assuring workers and employers that the reforms are designed to protect low-income earners, enhance fiscal federalism and improve the country’s competitiveness in the global labour market.

Oyedele disclosed this during a recent virtual engagement session organised for HR professionals, payroll managers, chief financial officers and tax managers, in collaboration with the Joint Revenue Board (JRB).

Nearly 15,000 participants registered for the session, underscoring strong stakeholder interest in the ongoing tax reforms.

According to him, a major highlight of the new tax laws is the automatic exemption of low-income earners. Workers earning the national minimum wage or less are fully exempt from Personal Income Tax.

He added that employees earning up to ₦100,000 monthly could also see their tax liability reduced to zero after allowable deductions such as pension contributions and rent relief are applied.

On fiscal structure, Oyedele clarified that Personal Income Tax remains payable to the relevant State Internal Revenue Services (SIRS), not the Nigeria Revenue Service (NRS). He explained that all revenue authorities will continue to collaborate through the Joint Revenue Board to ensure a harmonised and seamless experience for taxpayers nationwide.

The committee chairman further noted that for partnership income, tax obligations will be settled based on each partner’s state of residence, reinforcing the principles of fiscal federalism embedded in the reforms.

Addressing remote work taxation, Oyedele said the new framework makes Nigeria more attractive to global talent. Foreign employers, he explained, will no longer be deemed taxable in Nigeria solely because they have employees working remotely from within the country.

He also provided guidance on operationalising the new Pay-As-You-Earn (PAYE) computation process. Payroll managers were advised to begin with gross income, add benefits-in-kind where applicable, grant statutory reliefs, apply rent relief of 20 per cent of actual rent paid (capped at N500,000), and exempt the first N800,000 of income from tax before applying progressive rates.

Oyedele noted that although the top marginal tax rate is 25 per cent, effective tax rates would be significantly lower due to multiple reliefs and exemptions.

He reminded employers that annual PAYE returns are due by January 31 each year, while individual self-assessment returns must be filed by March 31. Beneficiaries of specific tax incentives, he added, are now required to file dedicated tax incentive returns.

How To Operationalising New PAYE Computation

To ensure that individuals benefit from the pro-workers provisions of the new tax laws, payroll managers are encouraged to follow the process below:

Step 1 – Start with gross income

Step 2 – Add benefits-in-kind (if applicable)

Step 3 – Grant reliefs for pension, NHIS, NHF etc

Step 4 – Apply rent relief (20% of actual rent paid capped at ₦500,000)

Step 5 – Exempt the first ₦800,000 (taxed at 0%) and apply progressive rates thereafter.

While the top marginal rate is 25%, the effective rate is much lower due to these deductions.

New Tax Acts For Financial Institutions

Did you know? Nigeria’s recent tax reforms did not introduce any new tax or levy on electronic transfers or money held in bank accounts. Contrary to some public misconceptions, there is no new charge on digital transactions. In fact, under the new laws, many businesses can now claim input Value Added Tax (VAT) credits on bank charges, easing compliance costs for formal operators.

To support smooth implementation and ensure consistent communication across the financial system, a multi-stakeholder engagement session was recently convened for financial institutions.

The session brought together the Nigeria Revenue Service (NRS), the Joint Revenue Board (JRB), the Central Bank of Nigeria (CBN), and the Presidential Fiscal Policy and Tax Reforms Committee.

Participants included Risk and Compliance Officers, Legal Advisers, Chief Financial Officers, and Regulatory Affairs Executives drawn from fintech companies, commercial and microfinance banks, pension funds, asset management firms, investment and securities companies, and other regulated financial institutions.

Key discussions focused on preventing wrongful charges to customers and reinforcing existing rules on the use of Tax Identification Numbers (TINs) for bank accounts operated for business or income-generating purposes—a requirement that has been in place since January 13, 2020.

Institutions were also encouraged to provide clear, tailored guidance to customers to help them file accurate tax returns and properly claim available tax deductions.

The engagement further addressed reforms aimed at improving the ease of doing business, including the repeal of Tax Clearance Certificates (TCC) as a requirement for foreign exchange transactions. Participants also examined the due process for the exercise of the power of substitution by tax authorities, noting that this power has long existed under previous tax laws but is now supported by clearer safeguards.

In addition, the session highlighted enhanced taxpayer protections under the newly established Office of the Tax Ombud, which is designed to strengthen accountability, transparency, and dispute resolution within the tax system.

Overall, the tax reforms are structured to promote formalisation, improve tax harmonisation across jurisdictions, and deepen financial inclusion, while building trust, efficiency, and certainty across Nigeria’s financial and tax ecosystem.

Manufactures Back Tax Reforms, Call For Accelerated Tax Harmonisation Across State

The Manufacturers Association of Nigeria (MAN) recently hosted a hybrid stakeholder engagement with the Presidential Committee on Fiscal Policy and Tax Reforms, focused on the implications of the new tax laws for the manufacturing sector.

The session highlighted key benefits of the reforms aimed at reducing the tax burden on manufacturers and simplifying compliance.

The new tax laws have key benefits for manufacturers, including elimination of multiple taxes to streamline operations and expanded input VAT credits and improved incentives for priority sectors.

The laws are also designed for promotion of technology adoption and automation to simplify and modernise tax compliance processes and elimination of burdensome compliance requirements such as certificate of acceptance for fixed assets as a precondition for capital allowance.

Apart from that, the signed laws are expected to ensure the rationalisation of distortionary incentives and higher tax exemption thresholds for small businesses; removal of withholding tax on manufacturers and turnover tax, helping conserve cash flow and avoid taxation of capital.

If you ask the authorities, manufacturers and other players in the real sector should be happy that the tax reform laws would give birth to the establishment of the Office of Tax Ombud to protect taxpayer rights and curb harassment and exploitation.

However, other areas identified for clarification and further action include: high import tariffs on certain raw materials, tax treatment and exemptions for exports, and accelerated adoption of tax harmonisation laws by all states to complement the national reforms and curb multiple taxation by state and non-state actors.

The dialogue also featured a robust question and answer session which enabled industry participants to ask questions and get clarifications on various tax laws.