Navigating the Upcoming Tax Changes: Lessons from Peller’s Situation

By Prof. Goodwill Ofunne

The tax landscape in Nigeria has undergone significant changes with the enactment of the new Tax Reform Bill into law on June 26, 2025. This comprehensive legislation introduces four key Acts: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (Establishment) Act (NRSA), and the Joint Revenue Board (Establishment) Act (JRBA).

These reforms aim to unify tax administration and policy by consolidating and replacing numerous outdated statutes, thereby providing a clear direction for personal income tax, corporate taxation, VAT, capital gains, and overall fiscal governance for both Nigerian employees and businesses.

The news reports that Peller, the TikToker, is seeking assistance after the Lagos State Government issued him a ₦36 million tax bill. When I came across some of Peller’s video clips, I found them amusing because he claimed he does not own a company, but earns revenue and believed that only companies are required to pay taxes.

Furthermore, he also mentioned that he could not afford such a sum, as he does not have a traditional job. Let me be honest, the law does not care about our ignorance. Some of us reading this will cry even more than Peller starting from 2026 if we do not restructure ourselves and our business now.

I have been advocating for business structuring in several of my entrepreneurial courses.
Firstly, it is essential to understand that everyone pays taxes, regardless of their financial situation. In fact, the less affluent often pay a higher percentage in taxes than the wealthy because 99% of them do not know how to minimise their tax burden legally.

As responsible citizens, here is vital advice your mentor likely, would not give you for free. Take a seat and read this post carefully. I want to illustrate how to avoid falling into the same trap that Peller has found himself in, because from next year, there will be no escape.

In Nigeria, we currently practice a multi-tier, mixed tax system, which can be confusing and may result in individuals being overtaxed or undertaxed. However, the current government has passed a new law that will implement a Progressive Tax System starting in 2026. Under this system, the higher your income, the higher the taxes you will pay. From next year, the affluent will pay higher taxes, while those on lower incomes will pay smaller amounts, and in some cases, nothing at all, depending on their earnings.

Let me simplify taxation for those who have not studied Financial Accounting and explain it in straightforward terms. The new tax law, when fully implemented in 2026, states that any individual earning less than ₦800,000 per year will be exempt from tax. Additionally, any company with a yearly turnover of less than ₦50 million will also be exempt from tax. Now, let’s discuss who must pay tax starting in 2026. In taxation, there are two main categories: PIT (Personal Income Tax for individuals) and CIT (Corporate Income Tax for companies). It therefore means that we shall pay individual income tax and company or corporate tax.

According to the new progressive tax system, if you earn above ₦800,000 as an individual, you are required to pay about 15–25% of that income to the Federal Government. For example: – ₦0 – ₦800,000 = 0% tax; ₦800,001 – ₦3,080,000 = 15% tax; ₦3,080,001 – ₦12,320,000 = 18% tax; ₦12,320,001 – ₦24,640,000 = 21% tax; ₦24,640,001 – ₦49,280,000 = 23% tax; above ₦49,280,000 = 25% tax.
In summary, if you make around ₦50 million in a year, you will owe ₦12,500,000 to the Federal Government. In contrast, for companies: – Income less than ₦50 million = no tax – Income above ₦50 million yearly turnover = 25% corporate tax.

The above scenario illustrates why, in this gig economy, we must restructure our business and view ourselves as a brand—a company—not just “catching a cruise” by watching TikTok videos and doing online work. For the Lagos State Government to bill Peller ₦36 million in taxes means he has reportedly made over ₦152 million that year.

Let me be frank, with our NIN and BVN, the government is also aware of the inflow and outflow in our accounts. For them to arrive at that figure indicates they have conducted background checks. The best advice anyone can give Peller right now is to hire a tax expert to review his accounts and negotiate with the government. If he fails to do this, there will be no escape. Many Nigerians find the current tax situation puzzling due to the previously disorganised tax system.

Historically, only the Lagos State Government has consistently demonstrated a serious approach to tax collection.

From next year, though, there will be no more “state this, state that.” Starting in 2026, the Federal Government will collect taxes directly. There will be no way to escape. The same frustration Peller experiences now may be the same for many of us on social media and in the high-income bracket when that time comes.

Prof. Ofunne is an expert in entrepreneurial Studies