Barely weeks after the implementation of Nigeria’s newly enacted tax laws, concerns are emerging over rising prices of goods and services across parts of the country, with indications that some businesses may be exploiting the reforms to justify arbitrary increases.
Although the Federal Government has consistently maintained that the tax changes are not intended to trigger short-term revenue expansion or price hikes, market observations suggest a different outcome on the ground. In several locations, consumers are already contending with higher costs, which some traders attribute directly to the new tax regime.
Investigations reveal that the increases are often introduced through Value Added Tax charges and broader price adjustments, even on goods and services that are either exempted or minimally affected by the new laws. This development has raised questions about compliance and transparency in the early phase of implementation.
The tax reforms formally took effect following the signing of four major bills into law by President Bola Tinubu on June 26. The legislation—described by the government as the most comprehensive overhaul of the tax system in decades—includes the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Together, they operate under the newly established Nigeria Revenue Service (NRS).
According to the NRS, the reforms are designed to strengthen economic competitiveness, attract investment, and ensure long-term fiscal sustainability. The agency has also clarified that the much-debated four per cent development levy on imported goods does not constitute a new tax, but rather a consolidation of multiple pre-existing levies into a single charge.
As part of the reforms, several items widely consumed by Nigerians have been exempted from VAT. These include basic foodstuffs such as rice, beans, vegetables and other unprocessed essentials. Medical and pharmaceutical products, educational books and services, electricity generation and transmission services, agricultural inputs, non-oil exports, diesel, petrol and solar power equipment are also exempt.
In addition, rents, humanitarian goods and companies with annual turnovers below ₦100 million are excluded from VAT obligations under the new framework. Despite these concessions, evidence suggests that many small and medium-scale enterprises are still transferring perceived tax burdens to consumers.
Interviews with business owners and traders across different sectors indicate that some have increased prices preemptively, citing the need to absorb compliance costs and uncertainty surrounding the reforms. While some acknowledge that not all their products are directly affected, they argue that the broader operating environment has become more expensive.
One small business owner, Yemisi, said the tax changes had compelled her to review prices upward to protect her margins. She explained that failing to do so could jeopardise the sustainability of her business by year-end, especially for registered enterprises required to comply fully with tax regulations.
Describing the tax and VAT framework as particularly challenging for small-scale operators, she noted that both revenue and income had been affected. “We have started increasing prices to accommodate the tax reforms,” she said. “If we don’t do that, business owners may end up without any gains.”
She added that clothing items previously purchased for ₦8,000 now cost about ₦10,000, while goods that once sold for ₦15,000 are now priced between ₦17,000 and ₦20,000.
As the reforms continue to roll out, analysts say clearer communication, enforcement and monitoring will be crucial to prevent misuse of the tax laws and to ensure that the intended economic benefits are not undermined by opportunistic pricing practices.
Traders and business owners have cited the recently enacted tax laws as a reason for higher costs, despite government assurances that the reforms were not intended to generate short-term revenue increases or drive prices up.
Ramat Owolabi, a trader, told our correspondent that goods supplied by wholesalers have become noticeably more expensive. She said products that were cheaper last December have surged by between 10 and 20 per cent this year.
“We don’t even understand what is happening in the market this year. What we bought at cheaper prices last December has skyrocketed this year,” Owolabi said. “Is it the tax that has affected the prices of products? This isn’t understandable. We hope we get clarity on this.”
Similarly, some car dealers have begun adding extra charges to vehicle prices, citing caution amid the new tax framework. A top Lagos-based dealer, who requested anonymity, explained that the adjustments were intended to avoid unexpected tax liabilities.
“Imagine after I have collected a commission of ₦2,000 on a car sold, then they bring a tax of ₦20,000 for me to pay at the end of the year on just that single car. Where do you expect me to get the money to balance the tax payment?” he queried.
He added, “Before, we didn’t do this, but now it is a must. If somebody wants to buy a car now, we will first calculate the VAT on the car price and add it to the amount the buyer will pay. That’s the new rule now. We just want to be very careful with the new law.”
The issue has also drawn widespread attention on social media platforms. Since the start of the year, complaints about suspected overcharging by small firms and street traders have proliferated on X (formerly Twitter).
In one post, a user identified as @Kings75431077 wrote: “Literally, everything in Nigeria has skyrocketed in price because of the new tax reform. A kilo of chicken from ₦6,000 to ₦6,600; ₦100 charges on POS for ₦5,000 is now ₦150. Buy ₦10,000 fuel, they charge you ₦500.”
Another viral post featured a customer who alleged that a Lagos-based restaurant, Ileyan, charged her an extra ₦23,000 on a ₦181,000 meal as 7.5 per cent VAT and five per cent consumption tax. In a separate case, social media influencer Rita Ushie claimed that ₦487,500 was added to a ₦6.5 million partial payment for a tech startup project as a VAT charge, sparking public debate.
Even routine financial transactions appear to be affected. A trader told Saturday PUNCH that over ₦4,000 was deducted as VAT from his PiggyVest savings, despite the law not stipulating VAT on savings interest.
The trend has drawn criticism from small business advocates. Femi Egbesola, President of the Association of Small Business Owners of Nigeria, described the practice as unfair, emphasizing that taxes should be paid from profits, not at the expense of consumers.
“If they are aware, they will know that the more money they make, the more taxes they will pay. Even though they increase the costs of their products, it will result in the fact that they will pay more taxes,” he said. Egbesola added that small businesses should be given exemptions and proper guidance to fully understand the reforms.
Economist Dr. Aliyu Ilias stressed the need for enforcement and monitoring, urging the Nigeria Revenue Service (NRS) to investigate price hikes and hold offending businesses accountable. “Government should go beyond bringing a reform. They should also ensure the reforms they are bringing are checked,” he said.
Responding to the concerns, Mr. Dare Adekanmbi, Special Adviser on Media to the Executive Chairman of the NRS, Zacch Adedeji, clarified that the new tax laws did not introduce any new taxes or increase existing rates.
“It thus goes without saying that there can be no justification for any increase in the prices of taxable goods and services because of the new tax laws,” Adekanmbi said, describing businesses that inflated prices as unpatriotic. He added that the reforms were designed to bring relief to Nigerians, especially low-income earners and small businesses.
The controversy highlights the challenges of implementing large-scale reforms in a complex economy. While the government emphasizes the long-term benefits of the tax overhaul—including economic competitiveness, investment attraction, and fiscal stability—the immediate impact on prices has sparked anxiety among consumers and traders alike.
As Nigeria navigates these reforms, experts say close monitoring and clearer communication will be critical to ensure that businesses comply without unfairly passing costs onto the public.