Lagos Introduces New Tax Regime: 98% of Workers to Pay Less or Zero Tax

The Lagos State Internal Revenue Service (LIRS) in Nigeria has unveiled a new tax regime where 98% of workers are expected to pay either reduced or zero taxes. The agency disclosed that out of 1,494,491 anonymized Lagos tax records for the 2024 tax year, 54.54% of taxpayers will pay zero tax, while 43.9% will pay less compared to the old regime.

Tokunbo Akande, the Special Adviser to the Executive Chairman of LIRS, described the new tax framework as a fundamental fiscal reform designed to promote business growth, enhance purchasing power, and reinforce financial discipline. The new tax law is said to be pro-poor, supporting small businesses and the middle class, while remaining neutral for larger businesses.

The reform is structured to protect vulnerable individuals and enterprises, with provisions favoring workers. Additionally, concerns around capital gains tax have been addressed, reflecting a shift towards fairer taxation.

The new law also includes higher tax rates for capital gains, depending on earnings. Akande urged companies to file their annual tax returns before the January 31 deadline to avoid last-minute rushes.