Businesses, Traders Raise Prices Amid Implementation of New Tax Laws

Findings indicate that since the new tax laws took effect in January, prices of certain products and services have risen in several parts of the country, with business owners attributing the increases to the revised tax framework.

Government Assurances Contrast With Market Reality

The Federal Government has repeatedly stated that the new tax laws are aimed at reducing multiple taxes, stimulating economic growth, and improving long-term fiscal stability rather than imposing additional burdens on consumers in the short term.

However, reports suggest that some businesses have begun adjusting prices upward, citing Value Added Tax (VAT) charges and general cost reviews linked to the new tax regime.

Overview of the New Tax Laws

The tax reforms became law on June 26 following President Bola Ahmed Tinubu’s assent to four major tax reform bills. The legislation represents what authorities have described as the most comprehensive overhaul of Nigeria’s tax system in decades.

The four laws include:

• The Nigeria Tax Act
• The Nigeria Tax Administration Act
• The Nigeria Revenue Service (Establishment) Act
• The Joint Revenue Board (Establishment) Act

These laws operate under a unified authority known as the Nigeria Revenue Service (NRS).

In December, the NRS explained that the reforms were designed to enhance economic competitiveness, attract investment, and strengthen long-term fiscal sustainability. The agency also clarified that the widely debated four per cent development levy on imported goods was not a new tax, but a consolidation of existing levies.

VAT-Exempt Items Under the New Regime

Under the revised tax laws, several goods and services commonly used by Nigerians are exempt from VAT. These include basic food items such as rice, beans, vegetables, and other unprocessed essentials.

Other VAT-exempt items and services include:

• Medical and pharmaceutical products
• Educational books, materials, and services
• Electricity generation and transmission services
• Non-oil exports
• Agricultural inputs
• Petrol, diesel, and solar power equipment

Rents and goods designated for humanitarian purposes are also exempt. Additionally, companies with an annual turnover of less than ₦100 million are not required to charge VAT.

Concerns Over Exploitation of the Tax Reforms

Despite the exemptions outlined in the new laws, findings suggest that some traders, small businesses, and service providers are exploiting the reforms to increase prices beyond what the tax changes require.

The developments have raised concerns among consumers, particularly as authorities continue to emphasise that the reforms are not intended to increase the cost of living but to create a more efficient and growth-oriented tax system.