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By Chinenye Anuforo
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With the recent signing of Nigeria’s new tax reform bills into law by President Bola Tinubu, the country carried out an operational reset that would elevate the economy and tech sector in particular.
Also to be impacted is the nation’s Information and Communications Technology (ICT) and cybersecurity sub-sectors.
The reforms, led by the Presidential Fiscal Policy and Tax Reforms Committee, aim to simplify a previously complex and burdensome tax environment.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, recently addressed stakeholders at the Nigerian Communications Commission (NCC)’s inaugural Annual Workshop for Attorneys-General in Lagos. He emphasized the critical need for these changes, noting that businesses, particularly in the tech and telecoms sector, have long contended with a multiplicity of taxes and taxing agencies. This fragmented approach, he stated, resulted in a high corporate tax burden that hindered growth.
According to Oyedele, the new framework is designed to be people-centric, growth-focused, and efficiency-driven. “Its goal is to foster an easier operating environment for businesses, which could lead to enhanced services and more competitive pricing for consumers.”
The reforms, enacted on June 26, 2025, include four key laws: the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA). These legislative changes are intended to modernize the tax system, broaden the tax base, and encourage compliance.
For the ICT and cybersecurity sector, which the Minister of Communications and Digital Economy, Bosun Tijani, said contributes between 16% and 21% to the GDP, the reforms present a mixed outlook.
Industry experts pointed to several beneficial aspects of the new tax regime. The reforms exempt individuals earning ₦800,000 or less annually from income tax. This measure the experts explained is expected to benefit entry-level ICT staff, interns, and junior developers, making workforce entry less financially burdensome and supporting efforts to address Nigeria’s digital skills gap.
For small companies with annual revenue under ₦100 million and fixed assets under ₦250 million, they are now exempted from Companies Income Tax (CIT), Capital Gains Tax (CGT), and the new Development Levy. This is a significant benefit for cybersecurity startups, freelance consultants, and small software firms.
“The ability for ICT companies to recover input VAT on all expenses, including services and fixed assets, is a major advantage, effectively lowering operational costs for businesses investing in hardware, software licenses, and infrastructure.
Also, the new Economic Development Incentive (EDI) offers a 5% annual tax credit on qualifying capital expenditure for five years, providing a valuable incentive for cloud infrastructure firms, cybersecurity companies, and telcos investing in data centers and other critical infrastructure.
Despite the positive developments, the reforms also introduce new complexities and potential drawbacks. For instance, companies offering professional services, such as IT consulting and software development, are notably excluded from the small business incentives.
Jonathan Ayodele, a Senior Cybersecurity Consultant, noted that this exclusion limits relief for local experts and small firms crucial to national cyber defense.
The reforms mandate strict new filing and documentation standards, including mandatory Tax Identification Numbers (TINs) and e-invoicing. For small ICT firms, the cost and complexity of compliance could potentially outweigh the intended benefits. Ayodele highlighted a compliance nuance where employers must file monthly PAYE returns even for tax-exempt employees, with penalties for non-compliance. While the reforms emphasize digital compliance and central reporting systems, there are no corresponding cybersecurity mandates.
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Ayodele warned that this creates a potential national attack surface, especially given Nigeria’s high ranking among countries targeted by cyberattacks.
The reforms are also expected to bring increased tax clarity for multinational technology vendors operating in Nigeria, potentially leveling the playing field for local competitors.
However, this could also lead to increased service costs if multinationals pass on new tax burdens to Nigerian customers.
“Furthermore, NGOs involved in cybersecurity awareness or digital literacy will now face new tax compliance requirements, which may divert resources from program delivery. The updated tax residency rules could also impact foreign ICT talent mobility, requiring local companies to assess potential tax liabilities for remote or short-term foreign staff.”
However, Oyedele expressed optimism about the initial results of the reforms, stating, “We are no longer where we used to be. These painful but necessary reforms are beginning to yield positive macro results. “
“The committee believes these changes will facilitate economic growth and shared prosperity. For the ICT sector, this could translate into more reliable networks, faster internet speeds, and potentially lower costs for data and calls as businesses face fewer tax hurdles”, he explained.
Also, reacting to the development, the Association of Licensed Telecommunications of Nigeria (ALTON) stated that the recent tax documents appear to address their concerns but the success of the new framework hinges entirely on effective implementation.
The Chairman of the group, Mr. Gbenga Adebayo highlighted the current burden faced by businesses due to various charges from both federal and state authorities.
However, “What we are seeing in the new document is that a lot of the taxes we are confronted with in states will now be paid at the federal level, and the states will no longer apply those multiple charges on us,” he stated.
He further elaborated on the proposed solution: “There has to be a central collection for all of these taxes so that once we pay to the center, we will have immunity against any demand from the states. This is what we are calling for.”
While acknowledging that new tax provisions seem to align with ALTON’s advocacy, Adebayo expressed a cautious optimism, stressing the critical difference between policy and practice. “Laws can be good, taxes and regulations can be very good. If it’s poorly implemented, we are back in the same cycle,” he warned.
According to Adebayo, the telecommunications sector, being on the exclusive legislative list, should see more taxes federal-based, with local regulations still applying but tax collection embodied in a central place. He clarified that the new tax framework has addressed their concerns, but the actual tackling of the issue will only come through robust implementation.
“We are now hoping that implementation will tackle it,” Adebayo concluded, underscoring the industry’s expectation for a seamless and efficient tax environment that fosters growth rather than hindering it with redundant levies.
As the full effects of these reforms unfold, the government’s commitment to creating a more predictable and supportive tax landscape for businesses and citizens remains clear.
