Businesses, Traders Raise Prices Amid Confusion Over New Tax Laws
Findings by Saturday PUNCH have revealed that several businesses, traders, and service providers across Nigeria are increasing the prices of goods and services, attributing the adjustments to the newly implemented tax laws that took effect in January. This trend has emerged despite repeated assurances from the Federal Government that the reforms were designed to reduce the tax burden on citizens, stimulate economic growth, and avoid short-term revenue pressure.
The tax reforms, which became law on June 26 after President Bola Tinubu signed four major tax bills, represent what the government has described as the most comprehensive overhaul of Nigeria’s tax system in decades. The new legal framework comprises the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act, all operating under the newly consolidated Nigeria Revenue Service (NRS).
According to the NRS, the reforms are intended to improve efficiency, enhance compliance, attract investment, and strengthen long-term fiscal stability. The agency has also clarified that the much-debated four per cent development levy on imports is not a new tax but a consolidation of existing levies.
Despite these assurances, evidence from markets, retail outlets, service providers, and online platforms suggests that some operators are using the reforms as justification to increase prices. These increases often appear as added Value Added Tax (VAT) charges or general price markups, even on goods and services that are either VAT-exempt or unaffected by the reforms.
Under the new tax laws, several essential items commonly used by Nigerians are explicitly exempt from VAT. These include basic food items such as rice, beans, vegetables, and other unprocessed foods; medical and pharmaceutical products; educational materials and services; electricity generation and transmission; agricultural inputs; non-oil exports; petrol, diesel, and solar power equipment. Rents, humanitarian goods, and businesses with annual turnover below ₦100 million are also exempt from charging VAT.
Related News
Tax Reform Committee Debunks Claims of 25% Levy on Building Materials and Funds Under Nigeria Tax Act 2025
Authorities overseeing Nigeria’s tax reforms have dismissed claims that the Nigeria Tax Act 2025 introduces a 25 percent tax on…
Governor Otti Defends Tinubu’s Tax Reforms, Says Critics Misunderstand Policy Framework
Abia State Governor Alex Otti has defended President Bola Tinubu’s newly introduced tax reform policies, stating that many critics lack…
PAYE Cut Boosts Workers’ Take-Home Pay in January — Oyedele
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, says Nigerian workers are beginning to receive higher…
However, interviews conducted with business owners and traders suggest that confusion, fear of future tax liabilities, and weak enforcement are driving price increases. A Lagos-based fashion retailer, identified only as Yemisi, said she had increased prices to “accommodate tax payments,” arguing that failing to do so could leave her business unprofitable by year-end. According to her, clothing items previously purchased for ₦8,000 now cost ₦10,000, while items sold at ₦15,000 now go for between ₦17,000 and ₦20,000.
Similarly, a trader, Ramat Owolabi, reported that wholesale prices had risen sharply since the beginning of the year, leading to higher retail prices. She noted that goods purchased late last year had increased by between 10 and 20 per cent, leaving traders and consumers alike confused about the true cause of the hikes.
The automobile sector has also been affected. A car dealer in Lagos explained that dealers are now adding VAT upfront to vehicle prices as a precaution against unexpected tax assessments at the end of the year. He argued that commission-based sellers risk being taxed far beyond their actual earnings if VAT and related charges are not factored in at the point of sale.
Beyond physical markets, social media platforms—particularly X—have become hotspots for complaints from Nigerians who allege arbitrary charges by businesses and informal traders. Users have reported higher POS charges, increased fuel levies, added market fees, and unexplained VAT deductions on digital savings and investment platforms.
One trader told Saturday PUNCH that despite VAT not being applicable to savings interest under the new law, over ₦4,000 was deducted as VAT when he withdrew funds from a one-year PiggyVest investment. Such reports have intensified public concern over compliance abuses and weak regulatory oversight.
Reacting to the development, the President of the Association of Small Business Owners of Nigeria, Femi Egbesola, condemned the practice of passing supposed tax costs directly to consumers. He described it as unfair and akin to extortion, stressing that taxes are meant to be paid from profit, not imposed arbitrarily on customers. However, he acknowledged that many small businesses still lack adequate understanding of the reforms and may require a grace period for proper compliance.
Economist Dr Aliyu Ilias also called on the government to strengthen enforcement and monitoring, warning that failure to do so could undermine the reform’s objectives and worsen the cost-of-living crisis.
Responding to the controversy, the Nigeria Revenue Service dismissed claims that the reforms justify price increases. According to Mr Dare Adekanmbi, Special Adviser on Media to the NRS Executive Chairman, there has been no increase in tax rates or introduction of new taxes under the laws. He described businesses exploiting the reforms to hike prices as unpatriotic, insisting that the tax changes were designed to ease financial pressure on low-income earners and small businesses.
As Nigerians continue to grapple with inflation and rising living costs, the unfolding situation highlights the gap between policy design and on-the-ground implementation—raising questions about enforcement, public awareness, and accountability in Nigeria’s evolving tax landscape.