Transparent Tax Reform Crucial to Reducing Business Burden — LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has stressed that the success of Nigeria’s newly enacted Tax Reform Act will depend largely on how transparently and effectively it is implemented. According to the Chamber, proper execution of the law is vital to easing compliance processes, lowering pressure on productive businesses, and expanding the country’s tax base without discouraging economic activity.

The business advocacy group made this position known while reviewing Nigeria’s economic performance in 2025 and outlining expectations and priorities for 2026. In its assessment, the Chamber urged the Federal Government to ensure that the tax reforms are applied in a manner that supports growth rather than constrains enterprise development.

Speaking on the matter, LCCI President, Leye Kupoluyi, explained that fiscal reform efforts gained significant traction following the signing of the Tax Reform Act in June 2025. The legislation harmonised several existing tax laws into a single, streamlined framework scheduled to come into force on 1 January 2026.

Kupoluyi noted that the reform presents an opportunity to modernise Nigeria’s tax administration, but warned that poor implementation could undermine its benefits. He emphasised that clarity, openness, and fairness in enforcement are essential to encouraging voluntary compliance and maintaining investor confidence.

The Chamber’s remarks came shortly after public concerns arose regarding the new tax regime, particularly fears that the government would automatically deduct taxes from personal bank accounts. These concerns were addressed by the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, during a televised interview.

Oyedele clarified that the revised tax system is based on self-assessment and declaration, not direct debits from bank accounts. He explained that individuals would not be charged automatically for funds transferred or received during the year. Instead, taxpayers are expected to declare their income at the end of the fiscal year in line with existing tax principles.

Reflecting on the broader economic environment, the LCCI observed that Nigeria entered 2026 after navigating a challenging year characterised by difficult reforms, economic resilience, and cautious signs of stabilisation. While 2025 recorded modest growth, the Chamber noted that fiscal implementation remained constrained, alongside growing concerns over public debt sustainability.

The group acknowledged that policies such as the removal of fuel subsidies, liberalisation of the foreign exchange market, and tight monetary conditions imposed substantial short-term hardship on households and businesses. However, it maintained that these measures were necessary steps toward restoring macroeconomic stability, rebuilding credibility, and improving Nigeria’s appeal to investors.

In terms of economic performance, the LCCI reported that Gross Domestic Product growth improved slightly in 2025. Output expanded by 3.98 per cent in the third quarter, driven primarily by the services sector, which now contributes more than half of total economic output.

The Chamber also highlighted Nigeria’s removal from the Financial Action Task Force (FATF) grey list as a significant reputational milestone. This development improved the country’s access to international capital markets, evidenced by strong investor demand for Nigeria’s Eurobond issuance and favourable assessments from global rating agencies.

Despite these positives, the LCCI cautioned that current growth levels remain inadequate to significantly raise living standards or reduce poverty. It pointed out that economic expansion continues to trail population growth, indicating that the benefits of recovery are not yet widely shared.

Turning to fiscal performance, the Chamber criticised the execution of the 2025 federal budget, stating that it fell short of delivering the stimulus required to support recovery. By the third quarter of the year, government revenue reached ₦18.6 trillion, representing about 61 per cent of the target, while expenditure stood at ₦24.66 trillion, or roughly 60 per cent of the budgeted figure.

Particular concern was raised over capital spending, which remained weak. Only ₦3.10 trillion, equivalent to 17.7 per cent, had been released for capital projects by the third quarter, limiting progress on infrastructure and dampening private sector confidence.

On public finance, the LCCI described Nigeria’s debt profile as increasingly worrying. Total public debt rose to approximately ₦152.39 trillion by June 2025, with debt servicing consuming more than 65 per cent of government revenue. According to the Chamber, this level of debt servicing significantly restricts the government’s ability to invest in infrastructure, social services, and long-term growth initiatives.

The group stressed that expanding revenue sources and exercising discipline in borrowing are no longer optional, but essential for fiscal sustainability.

From a business perspective, the LCCI noted that companies continued to face multiple challenges throughout 2025. These included persistent inflationary pressures, exchange rate instability, insecurity in key agricultural regions, unreliable power supply, and the burden of multiple taxation across different levels of government.

Looking ahead to 2026, the Chamber called for improved coordination between fiscal and monetary authorities to consolidate disinflation gains and gradually reduce interest rates. Such measures, it said, would help unlock private sector credit and stimulate investment.

The LCCI also advocated for stronger confidence in the foreign exchange market, faster infrastructure development through public-private partnerships, and policies deliberately designed to promote inclusive economic growth.

In conclusion, the Chamber described 2025 as a transition period from crisis management to cautious stability. It warned, however, that the central task for 2026 is to move beyond stabilisation and ensure that macroeconomic reforms translate into tangible improvements in productivity, employment, and overall prosperity.