Nigeria’s New Tax Laws: How VAT and Business Compliance Are Driving Price Hikes in 2026

Some businesses and traders across Nigeria are reportedly increasing the prices of goods and services following the implementation of the country’s new tax laws, despite government assurances that the reforms would not lead to higher costs for consumers.

Findings indicate that since the tax reforms took effect in January, several business owners have adjusted prices upward, attributing the increases to Value Added Tax obligations and other perceived compliance requirements. This development comes even as the Federal Government insists that the reforms are aimed at reducing multiple taxes, improving efficiency, and stimulating economic growth without imposing additional short-term burdens.

The new tax framework became law on June 26 after President Bola Tinubu signed four major tax reform bills. These include the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act. All four laws operate under the unified authority of the Nigeria Revenue Service.

According to the NRS, the reforms are designed to enhance Nigeria’s economic competitiveness, attract investment, and strengthen long-term fiscal stability. The agency has also clarified that the widely debated four per cent development levy on imported goods is not a new tax but a consolidation of existing charges.

Despite these assurances, evidence suggests that some traders and service providers are using the new tax laws as justification for price hikes across various sectors.

Under the tax reforms, several essential items commonly used by Nigerians are 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, non-oil exports, agricultural inputs, petrol, diesel, and solar power equipment are also exempt.

Rents, humanitarian relief items, and goods supplied to aid projects are excluded from VAT, while businesses with annual turnover below ₦100 million are not required to charge VAT at all.

However, interviews with traders, retailers, and small business owners reveal that many are still raising prices. Some business operators say the increases are necessary to accommodate perceived tax liabilities and avoid losses by year-end.

A fashion retailer who identified herself as Yemisi said the new tax environment had forced her to review prices upward to remain profitable. She explained that clothing items previously sold at ₦8,000 now go for about ₦10,000, while products that once cost ₦15,000 are now priced between ₦17,000 and ₦20,000.

Another trader, Ramat Owolabi, said wholesalers have increased supply prices, pushing market costs up by as much as 20 per cent. She expressed confusion over the sudden hikes and questioned whether the new tax regime was directly responsible.

Car dealers have also reportedly adjusted their pricing strategies. A Lagos-based dealer said VAT is now calculated and added to vehicle prices before sales are concluded, citing concerns about unexpected tax liabilities at the end of the financial year. According to him, dealers are trying to protect themselves from potential assessments that could exceed their actual commissions.

Public complaints over rising prices have also gained traction on social media. Many Nigerians have taken to X to accuse traders and service providers of exploiting the tax reforms to impose arbitrary charges. Posts have highlighted increased POS transaction fees, higher fuel surcharges, and inflated food prices, all allegedly linked to the new tax laws.

In one widely shared incident, a restaurant customer reported being charged additional VAT and consumption tax on a large bill, pushing the total amount paid far above the original cost. Similar complaints have surfaced involving project payments, savings withdrawals, and routine financial transactions.

A trader who requested anonymity claimed that VAT was deducted from interest earned on a digital savings platform, despite official clarification that savings interest is not subject to VAT under the new laws.

Meanwhile, attempts to obtain reactions from major labour and manufacturing groups were unsuccessful as representatives did not respond to enquiries at the time of reporting.

Reacting to the situation, the President of the Association of Small Business Owners of Nigeria, Femi Egbesola, condemned the practice of passing tax obligations directly to consumers. He described such actions as unfair and contrary to the intent of the tax reforms, noting that businesses are expected to pay taxes from profits rather than impose excessive charges on customers.

An economist, Dr Aliyu Ilias, also stressed the need for stronger enforcement and monitoring. He urged the Nigeria Revenue Service to investigate reported abuses and sanction offenders, warning that weak enforcement could worsen inflation and deepen the cost-of-living crisis.

Responding to the controversy, the Nigeria Revenue Service stated that the tax reforms did not introduce new taxes or increase existing rates. According to the agency, there is no justification for raising prices of taxable goods and services based on the new laws.

A spokesperson for the NRS described businesses exploiting the reforms to hike prices as acting against national interest. He added that the reforms provide relief for low-income earners and small businesses, particularly in areas where Nigerians spend a large portion of their income.

The agency reiterated that the reforms are intended to simplify taxation, reduce the burden on vulnerable groups, and promote sustainable economic growth, not to fuel inflation or unjustified price increases.