Some businesses and traders across the country appear to be exploiting Nigeria’s newly implemented tax laws to arbitrarily increase the prices of goods and services, findings by Saturday PUNCH have revealed.
Since the tax reforms took effect in January, the Federal Government has repeatedly insisted that the new laws are designed to lower certain tax burdens and stimulate economic growth, without generating immediate revenue increases. However, recent developments suggest that some business owners have begun hiking prices, attributing the increases to the tax reforms.
Investigations show that the adjustments are being imposed mainly through Value Added Tax (VAT) charges and general price mark-ups on goods and services.
The controversial tax regime came into force on June 26 after President Bola Tinubu signed four major tax reform bills into law, marking what the government has described as the most sweeping overhaul of Nigeria’s tax system in decades. The laws include the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act, all operating under the umbrella of the Nigeria Revenue Service (NRS).
In December, the NRS explained that the reforms were aimed at improving economic competitiveness, attracting investment and strengthening long-term fiscal stability. The agency also clarified that the much-debated four per cent development levy on imported goods was not a new tax, but a consolidation of existing levies.
VAT exemptions under the new law
Under the new tax framework, several 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, diesel, petrol and solar power equipment are also exempt.
Rents and goods for humanitarian purposes are likewise VAT-free. In addition, companies with annual turnover below ₦100m are exempt from charging VAT altogether.
Despite these exemptions, Saturday PUNCH found that some business owners, traders and small and medium-sized enterprises (SMEs) are using the new tax laws as justification to increase prices and boost profit margins.
Traders, businesses speak
In separate interviews, retailers and business owners confirmed noticeable price increases, citing the need to accommodate new tax obligations.
A business owner identified as Yemisi said she had begun adjusting prices to absorb tax payments, warning that failure to do so could affect profitability.
“We’ve started increasing prices because of the tax reforms. If we don’t, business owners may end up with no gains,” she said, adding that clothing items previously sold for ₦8,000 now cost ₦10,000, while goods that went for ₦15,000 now sell for between ₦17,000 and ₦20,000.
Similarly, a trader, Ramat Owolabi, said wholesalers had raised prices, forcing retailers to follow suit.
“We don’t really understand what’s happening in the market. Items that were cheaper last December have gone up by 10 to 20 per cent this year. Is it the tax? We need clarity,” she said.
Car dealers were also reported to be adding extra charges to vehicle prices. A Lagos-based dealer, who declined to be named, said the practice was driven by caution over potential tax liabilities.
“Everyone is trying to be careful so that you don’t end up paying tax on money you didn’t really make,” he said, explaining that VAT is now calculated and added upfront to car prices paid by buyers.
Public outcry on social media
Since the beginning of the year, Nigerians have taken to X (formerly Twitter) to complain about alleged extortion by traders and small businesses, blaming the new tax laws.
One user, @Kings75431077, wrote that prices of food, POS charges and fuel had surged due to the reforms. Another viral post showed a restaurant receipt where a customer was charged additional VAT and consumption tax on a meal, sparking widespread criticism online.
Similarly, a receipt shared by social media influencer Rita Ushie (Raye) showed an added ₦487,500 VAT charge on a ₦6.5m payment for a tech startup project, further fuelling debate.
A trader who spoke anonymously to Saturday PUNCH also alleged that VAT was deducted from his savings interest, claiming over ₦4,000 was charged on his PiggyVest investment after withdrawal.
Efforts to obtain comments from the Manufacturers Association of Nigeria and the Nigerian Labour Congress were unsuccessful as their representatives did not respond to calls or messages.
SMEs, experts react
The President of the Association of Small Business Owners of Nigeria, Femi Egbesola, condemned the practice of raising prices under the guise of tax compliance, describing it as unfair and exploitative.
“Taxes should be paid from profit, not used as an excuse to extort consumers,” he said, adding that the behaviour also reflected poor understanding of the intent of the tax reforms.
An economist, Dr Aliyu Ilias, urged the government to ensure strict monitoring and enforcement, calling on the NRS to investigate reported abuses and sanction offenders.
NRS: No basis for price hikes
Reacting to the issue, the Special Adviser on Media to the Executive Chairman of the Nigeria Revenue Service, Dare Adekanmbi, said the new tax laws neither increased tax rates nor introduced new taxes.
“There is no justification for increasing the prices of taxable goods and services because of the new tax laws,” he said, describing such actions as unpatriotic.
According to him, the reforms were designed to provide relief for Nigerians, particularly low-income earners and small businesses, in areas where households spend a large portion of their income.