Minister of finance and coordinating minister of the economy Mr Wale Edun has laid to rest the controversy surrounding the 5% petroleum surcharge which has stirred negative reactions across the country.
Mr Edun in a brief session with members of the media in Abuja said although it is not a new law, the government is not oblivious of the economic situation of Nigerians and as such would not be adding to their burdens.
The new tax law, assented to by President Bola Tinubu would become operational January 1, 2026 according to the minister.
“This is a government that is responsive and of course we understand the economic pressures faced by Nigerian households and of course businesses. And we remain fully committed to macroeconomic stability and private sector led growth. Domestic private investors and even foreign investors and of course inclusive prosperity. Growth that crates jobs.”
“So today let me clarify government’s position and reaffirm our economic vision and also explain the preparations required for a smooth and effective implementation of the tax reform act.”
The minister took time to explain the background of the 5% surcharge which he said had its roots way back in 2007 specifically under the Federal Roads Maintenance Agency FERMA act and it was designed as a user charge to sustainably finance Nigerian roads network, its maintenance and upkeep.
The original purpose was that 40% of that user charge would go to FERMA while 60% would go to states or the states equivalent of FERMA.
Mr Edun said the policy objective at that time was to ensure that safer, better maintained roads. The 2007 stipulation appeared in the new act because it did not create any new surcharge but simply maintained and harmonized all charges for clarity and ease of compliance.
“And I think its important to make this distinction. The inclusion of the surcharge in the 2025 Nigerian tax administrations act does not mean an automatic introduction of new tax. It doesn’t mean fresh taxation automatically. Now, the Nigeria tax administration act which was signed into law by Mr President in June represents Nigeria’s most comprehensive tax reform in decades as we know its a set of four bills over all. It is a major milestone in our effort to modernize tax administration and improve revenue mobilization while protecting citizens from excess burdens”.
The minister went ahead to list out key highlights of the tax administration law to include consolidation of multiple tax laws into a single streamlined framework, elimination of overlapping taxes and charges, simplifying processes for individuals and businesses, strengthen tax governance as well as improve coordination between the federal and subnational governments.
While restating that the 5% surcharge will not automatically come into effect with the new tax act on January 1, 2026, minister Wale Edun explained that there is a process before the surcharge becomes effective which includes a commencement order from the minister of finance which would be published in a gazette and as at today, no order or plan to implement any surcharge is in place. “The Nigeria tax act is a transformational legal document and the process of its effective implementation requires preparation which is now ongoing and as we know, it is four bills. The Nigerian tax bill, the tax administration bill, the revenue service bill and the joint revenue board bill. Its taken about two years, consultation, negotiations, collaboration and technical work to bring it to become law’.
Governments economic vision remains to build a inclusive, strong and growing economy and to ensure that the private sector is given the opportunity to improve, create jobs and grow the economy, he added.
Mr Edun concluded with an assurance that government has created working timelines to fully prepare Nigerians ahead of January 1, 2026 for the take off of the tax law.
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