The Federal Government Government has confirmed that reforms in Personal Income Tax (PIT) and Company Income Tax (CIT) will commence from January 2026 to align with the nation’s fiscal year.
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The government also made clarifications on Tuesday on its borrowing strategy, maintaining that borrowing to finance projects remains a legitimate tool for growth and infrastructure financing, not a sign of economic crisis as a lot of Nigerians are made to believe.
Chairman, Federal Inland Revenue Service (FIRS) Zaccheus Adedeji spoke on Tuesday while fielding questions from State House Correspondents at the Presidential Villa, Abuja.
Speaking on the controversial Central Bank “Ways and Means” facility, the FIRS boss explained that the Tinubu administration had ended the practice of direct overdraft financing.
According to him, the outstanding exposure was converted into a structured federal loan now being serviced with both principal and interest payments.
“One of the key decisions of Mr President was to collateralise Ways and Means. We stopped printing. The entire loan is now recognized in the federal government’s books as a formal obligation, and we are repaying capital and interest according to the approved tenor. That is why the system has stabilized and why pressure on the exchange rate has eased,” he said.
Responding to criticism that the government continues to borrow despite improved revenue performance, the tax chief insisted that borrowing is part of every national budget.
“A budget has three pillars, expenditure, revenue, and loans. If my expenditure is N100,000, revenue is N90,000, and borrowing is N10,000 in line with what is approved by the National Assembly, what is wrong with that? No country survives solely on revenue,” he argued.
He dismissed critics as “container economists” recycling social media arguments without understanding fiscal planning. Borrowing, he maintained, is essential for long-term investments.
“You borrow to beat higher costs in the future. You borrow for infrastructure like roads, which will later generate tax revenue from those who use them. That is how sustainable economies are built. Government is not borrowing to pay salaries; it is borrowing to create assets that will outlive the present administration,” he said.
On taxation, the FIRS chairman explained that Nigeria’s four key tax laws, Tax Act, Tax Administration Act, Nigeria Revenue Service Act, and the Joint Tax Board Act, are being harmonized under the new reforms.
He emphasized that while administrative changes took effect immediately after President Tinubu signed them into law, substantive tax changes such as PIT and CIT would commence from January 2026 to synchronize with Nigeria’s financial year.
“Company Income Tax is assessed on a preceding-year basis. If a company makes profit this year, it will be taxed the following year. To avoid distortions, it is better to begin new tax provisions in January, when the government’s fiscal year starts. That is why Mr. President, being a strategist, directed commencement from January,” he said.
With the reforms, the FIRS has already begun operating as the “Nigeria Revenue Service” in line with the new law, effective from the date of presidential assent.
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