Nigeria has taken another significant step toward implementing its sweeping tax reforms after the Federal Government inaugurated an inter-ministerial committee to draft a new Value Added Tax (VAT) Modification Order, a framework expected to provide greater certainty for businesses and tax administrators.
The committee, inaugurated on Friday, July 24, 2026 in Abuja by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has been given six weeks to produce the draft VAT Modification Order 2026. Its assignment also includes compiling comprehensive schedules of VAT-exempt and zero-rated goods and services with their corresponding Harmonised System (HS) codes, preparing implementation guidelines, and delivering a report on stakeholder consultations.
The initiative follows the implementation of the Tax Reform Acts, which came into effect on January 1, 2026, marking Nigeria’s most extensive overhaul of its tax system in decades. The new legislation replaces the previous VAT Modification Order, making a completely new framework necessary to align tax administration with the updated legal structure.
Speaking during the inauguration, Oyedele said the reforms are designed to simplify Nigeria’s tax regime, improve regulatory certainty, strengthen the country’s competitiveness, and create a more predictable investment environment while protecting vulnerable households.
According to the minister, the committee’s responsibility extends beyond updating existing regulations. Instead, it is expected to develop a modern VAT framework that supports industrialisation, export growth, innovation, food security, and the country’s energy transition agenda without compromising the integrity of the tax system.
As part of its mandate, the committee will review the existing VAT administration framework, identify areas requiring clarification, consult with public and private sector stakeholders, develop definitive lists of VAT-exempt and zero-rated supplies, assess the revenue implications of proposed classifications, and recommend legislative amendments where necessary.
Its membership reflects a broad cross-section of government agencies and private-sector stakeholders, including representatives from the Federal Ministry of Finance, the Nigeria Revenue Service, the Nigeria Customs Service, the Federal Ministry of Industry, Trade and Investment, the Joint Revenue Board, the Manufacturers Association of Nigeria, the Tax Advisory Committee, and the Tax Justice and Governance Platform.
The new VAT Order is expected to be closely watched by manufacturers, importers, exporters, and investors seeking clarity on the tax treatment of goods and services under the revised legislation. Clear classifications could reduce compliance disputes, improve business planning, and lower administrative costs while ensuring consistent implementation across Nigeria.
The urgency of the exercise reflects the growing importance of VAT to public finances. Nigeria generated ₦2.42 trillion in VAT revenue during the first quarter of 2026, representing a 17.06% increase from ₦2.07 trillion recorded in the same period of 2025. Under the new revenue-sharing formula introduced by the reforms, states now receive 55% of VAT collections, compared with 50% under the previous framework, strengthening subnational government finances.
The Tax Reform Acts, signed into law by President Bola Tinubu in June 2025, comprise the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. Together, they are intended to modernise tax administration, improve compliance, broaden the tax base, and enhance Nigeria’s long-term fiscal sustainability.
