States Race for N4trn VAT Windfall as New Tax Regime Takes Off in January 2026
Ahead of the January 1, 2026, commencement of Nigeria’s new tax regime, three states have completed the domestication of the Harmonised Taxes and Levies Law, signalling accelerating sub-national alignment with the Federal Government’s fiscal reform agenda.
Anambra and Zamfara States have joined Ekiti State in enacting legislation to domesticate the harmonised tax framework, while Lagos, Katsina and Bauchi States, among others, are at advanced stages of passing similar laws.
The reforms are designed to streamline tax administration, eliminate multiple and overlapping levies and improve revenue transparency across states.
Anambra State Governor, Professor Charles Chukwuma Soludo, on Monday signed the Harmonised Taxes and Levies Law in Awka, making the state the third to adopt the framework ahead of the January deadline.
In Zamfara, Governor Dauda Lawal had earlier signed legislation repealing and re-enacting the state’s consolidated revenue laws, establishing a strengthened Internal Revenue Service and providing a legal framework for harmonised tax and non-tax revenue administration.
Soludo said the reforms would significantly reduce the burden of multiple charges on citizens and businesses, improve compliance and restore confidence in government institutions. He added that beyond boosting administrative efficiency, a harmonised tax regime enhances transparency and curbs arbitrary revenue collection.
The Joint Revenue Board (JRB), which welcomed the development, said the reforms would create a more predictable operating environment for businesses, particularly small and medium-scale enterprises that are often most affected by informal levies and enforcement abuses at the sub-national level.
According to the Board, several other states have recorded measurable progress toward enacting harmonised tax laws, with legislative processes at advanced stages in Lagos, Katsina and Bauchi.
The JRB noted that the growing alignment among states underscores a collective resolve to bring order and uniformity to sub-national revenue administration nationwide, in line with broader fiscal reforms focused on improving compliance through clarity rather than coercion.
Earlier, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Professor Taiwo Oyedele, said states that adopt the new tax laws stand to benefit significantly from the revised revenue framework.
He disclosed that adopting states could earn up to N4 trillion annually from Value Added Tax, while state government bonds will be exempted from tax.
Oyedele explained that the new tax regime, scheduled to take effect in January 2026, transfers the full proceeds of electronic money transfer levies to states and exempts state bonds from taxation, helping to reduce borrowing costs and expand fiscal space.
He, therefore, described the reforms as a unique opportunity for states to close tax gaps, strengthen revenue resilience and invest more sustainably in infrastructure and economic development.
