2026: 98% of Nigerian Workers Set for PAYE Tax Exemption"

Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has announced that approximately 98% of Nigerian workers will no longer pay the Pay-As-You-Earn (PAYE) tax once new tax reforms come into effect in January 2026.

Speaking at the 31st Nigerian Economic Summit (NES31) in Abuja, Oyedele explained that the reforms aim to protect low-income earners and those near the poverty line, while creating a more equitable and efficient tax system.

“The more inequality you create, the more time bombs you have,” he said. “These reforms are meant to improve governance in revenue collection, enhance accountability, and ensure tax revenues are properly utilized.”

Part of President Bola Tinubu’s broader fiscal policy agenda, the comprehensive tax reforms are also expected to improve Nigeria’s credit rating, reduce borrowing costs for both government and businesses, and attract private-sector investment.

Oyedele revealed that his role in driving these changes has come with personal risks, including death threats.

“Reform is tough,” he said. “I’ve faced many challenges, but I’m not afraid. I recently turned 50, and if anything happens, I know I’ve done my part. These reforms belong to Nigerians — not to the President, not to me.”

He emphasized that the new system is designed so that the wealthy and large corporations bear a greater share of the tax burden, while those with lower incomes will be exempt.

“The poor won’t pay personal income tax,” he stated. “Those who earn more will contribute more — that’s what fairness looks like in a modern economy.”

Small and low-income businesses will also benefit from tax exemptions. Oyedele mentioned plans to introduce tax-exempt stickers for nano businesses — such as street vendors and artisans — to protect them from undue harassment by local authorities.

Addressing concerns about resistance from subnational governments, he assured that the Joint Tax Board (JTB), which includes representatives from all 36 states and the FCT, is actively involved and supportive of the reform process.

Guidelines and explanatory notes for implementation are currently being developed by the Federal Ministry of Finance, the JTB, and the International Financial Reporting Standards (IFRS) Foundation.

Oyedele stressed that states will not lose revenue under the new system. Instead, they could gain more from the Federation Account without overburdening vulnerable citizens.

“States generated N3.36 trillion in taxes last year,” he said. “Even if they don’t hit that same figure in 2026, none will go bankrupt. We can’t build a better system by taxing our most vulnerable.”

He cited the recent FAAC allocation of over N2 trillion to federal, state, and local governments as early proof that the fiscal reforms are beginning to yield positive results.

Oyedele also criticized outdated and regressive tax provisions that disproportionately impact the poor, such as the “wheelbarrow tax,” and disclosed that the committee has proposed ten constitutional amendments to modernize tax laws.

Beyond taxation, the committee is working on expenditure reforms to ensure transparency and efficiency in how public funds are used.

“We’re not only focused on revenue. We’re also addressing how the money is spent — to guarantee that taxpayers see real value,” he said.

Although he refrained from revealing specific fiscal regime proposals, Oyedele affirmed that the committee’s work is aimed at building a long-term, sustainable economic future.

“Our goal is a simple, fair, and efficient tax system — one that drives growth, attracts investment, and shares the burden justly.”