The Federal Inland Revenue Service (FIRS) has announced that food, agriculture education, and shared transportation will no longer be subject to value-added tax (VAT) under Nigeria’s new tax reform package.

FIRS executive chairman, Zacch Adedeji, confirmed the development, which is designed to ease financial pressure on households, strengthen small businesses, and drive inclusive growth.

“This is the best thing that has happened to Nigeria’s fiscal ecosystem since 1960,” Adedeji said, stressing that the reforms will remove long-standing hurdles that slowed economic productivity.

The reforms, set to take effect in January, consolidate multiple tax laws into a single framework. 

Notable features include VAT exemptions on food, education, agriculture, and shared transport, Exemptions for businesses with annual turnover below ₦50 million, Adjusted income tax thresholds to protect low-income earners, and the Renaming of FIRS to the Nigeria Revenue Service (NRS) to reflect its expanded mandate.

VAT removal is expected to reduce input costs, encourage investment, and strengthen food supply chains. 

Farmers and agribusiness operators say the exemption could make products more affordable while boosting local producers’ competitiveness against imports.

According to Adedeji, the reforms are already yielding results, with Nigeria’s tax-to-GDP ratio rising from 10% to 13.5% in two years. 

States have reportedly used increased revenue to repay ₦1.85 trillion in debts, reducing their debt-servicing burden.

Adedeji likened the reform process to “the pain of a woman in labour,” admitting there may be short-term discomfort but assuring that current interventions will cushion the impact. 

He added that a petrol surcharge in the new law would only take effect following official ministerial approval.

Source: Tech Economy

Image Credit: Fresh Page Nigeria