Oyedele: Businesses Eligible to Claim N3.4tn Input VAT Credits Under Nigeria’s New Tax Laws

*Says new tax reform most crucial development in Nigeria since pension reform

N ume Ekeghe

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has disclosed that businesses will be able to claim about N3.4 trillion in input tax credits under Nigeria’s new tax laws, describing tax reforms as a fundamental reset of the economy and the country’s social contract.

Oyedele, who explained that the new tax framework, set to commence in January 2026, comes at a critical time, noted that Nigeria narrowly avoided complete economic collapse in 2023.According to him, the reforms have placed the country on a firmer path to recovery, modernisation, and sustainable growth.Speaking at a media parley in Lagos, Oyedele emphasised that the reforms represent the most impactful legislation since the landmark pension reforms of the early 2000s.

Input Value Added Tax (VAT) credit is the VAT paid by a business on goods and services used in its operations.Under the new law, companies can deduct this VAT from the amount they charge customers and remit to the government, thereby reducing their overall tax burden and eliminating multiple taxation along the value chain.He described the Nigeria Tax Reform Acts as the most critical economic development in Nigeria since the Pension Reform Act signed into law by the former President Olusegun Obasanjo’s government.

According to him, “Eminent Nigerians agree on this. Recently, an elder statesman, Stanley Orosanye, and a founder of one of the top three banks in Nigeria, called me expressing their joy that President Bola Ahmed Tinubu had the political will to push the tax reforms through. This is a game changer for Nigeria.”

On input VAT, Oyedele explained: “The new law from January next year makes you eligible to claim input credit, almost like receiving money back into your account. From next year, input VAT on assets, overheads, and services can be claimed. Input VAT on inventory, which is currently the only allowable claim, will also continue under the new law. Do you know how much this translates to? It is N3.4 trillion based on 2024 VAT collection. This is what the government is giving back to businesses next year by way of input credit.”He noted that beyond VAT, the reforms cover corporate taxation, capital gains, and compliance processes, all designed to incentivise investment, encourage formalisation, and strengthen Nigeria’s fiscal stability.

“These reforms are more than just taxes. They represent a reset of our economy and how we deliver the social contract. For the first time, businesses will see government policy working to reduce their burden, not increase it. This is about building trust, encouraging growth, and ensuring fairness in the system,” Oyedele said.

“Furthermore, one of the most far-reaching elements of the tax reform package is the reworking of how Value Added Tax applies to everyday necessities. Under the current framework, staples such as bread are exempt from VAT, which means producers do not charge VAT at the point of sale. But the exemption comes with a cost,” he said.He noted that because exempt goods do not qualify for input VAT recovery, bakers absorb VAT on virtually everything required to run their businesses, from flour, sugar, and butter to equipment, fuel, delivery vans, phones, and airtime, and that this structure quietly pushes up prices for consumers.

“The current system says ‘that is your problem to deal with.’ So, bakers add those VAT costs to the price of bread, making it more expensive for consumers.“That structure will change from January. Bread and other essential items will move from VAT-exempt to zero-rated status. While producers will still charge VAT at 0 per cent, they will now be able to reclaim the full VAT paid on their inputs, a shift designed to lower production costs and ease price pressures.

“Food, education, and healthcare are now zero-rated. Schools from kindergarten to universities will charge 0 per cent VAT and recover VAT on laptops, boards, computers, and other inputs. This will help bring down the cost of education,” Oyedele said.He added: “Not all essential sectors will fall under the zero-rating regime. Transportation and rent will remain VAT-exempt, largely due to the complexity of administering VAT in those areas. Together, however, they form part of the five core expenses that dominate household spending: food, housing, transport, healthcare, and education. There is no luxury in those five items. It does not make sense for a country to be taxing people on the things they need to survive.”

Oyedele also pushed back against claims that the reforms expanded the tax burden or relied excessively on borrowing. He noted that several controversial levies, including excise duties on airtime and data, the cybersecurity levy, carbon taxes on plastics, and the four per cent import levy, have been scrapped.

“There are no new taxes on the masses,” he added.