Businesses and traders in urban Nigerian markets are increasing prices on goods and services, attributing the adjustments to the newly implemented tax laws that took effect in January. This phenomenon is occurring despite government assurances that the reforms would not impose immediate revenue increases. The trend has significant implications for consumers, small and medium enterprises, and the broader urban economy.
The new tax regime stems from four major reform bills signed into law on June 26, 2025 by President Bola Tinubu, identified as the most comprehensive overhaul of Nigeria’s tax system in decades. These include the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. The government has emphasized that the reforms aim to strengthen competitiveness, attract investment, and support fiscal stability over time.
Under these laws, Value Added Tax (VAT) remains at 7.5 percent but a list of essential goods is exempted, including rice, beans, vegetables, basic food items, medical products, educational materials, non-oil exports, agricultural inputs, diesel, petrol, and solar power equipment. Companies with annual turnover below N100 million are exempt from charging VAT entirely.
Investigations by correspondents in Lagos, Abuja, and other urban centres show price increases in everyday goods and services attributed by business owners to the need to “accommodate fresh tax payments.” A Lagos retailer known as Yemisi reported sharp increases in stock price points saying, “Clothes we used to buy for N8,000 now cost N10,000, while items that sold for N15,000 are now sold for between N17,000 and N20,000.”
Another trader, Ramat Owolabi, noted that supply costs from wholesalers have surged with product prices increasing between 10 and 20 percent compared to late 2025. In the automotive sector, some car dealers in Lagos have added extra charges to vehicle prices to preempt anticipated tax liabilities, reflecting business caution in the face of new compliance demands.
Social media discourse on X also highlights consumer concerns over unexpected increases at points of sale, including restaurants imposing combined VAT and consumption tax totals that customers did not anticipate. A trader reported deductions as VAT on savings interest withdrawals, indicating broader confusion on tax application.
For urban consumers, the changes raise cost-of-living pressures, particularly in metropolitan hubs where disposable income is already strained. Increased prices on staple goods and services can reduce household purchasing power and shift consumption patterns toward lower-cost alternatives. Urban SMEs are particularly exposed; many operate on thin margins and may struggle to balance compliance with maintaining affordable prices. Traders’ strategy of passing costs to consumers may dampen demand and disrupt small business growth in the near term.
The trend also highlights gaps in public understanding of the tax reforms. Government and tax authorities may need to intensify awareness campaigns and clarify provisions to prevent misinterpretations that lead to unwarranted price adjustments. Stronger enforcement mechanisms could prevent opportunistic pricing that harms consumers and undermines trust in reforms.
Conclusion and Takeaways
The emergence of price increases linked to Nigeria’s new tax laws underscores early adaptation challenges among urban market actors. For consumers, awareness of exempted items and rights can inform better purchasing decisions. SMEs are encouraged to engage with tax professionals and explore digital compliance tools to minimise unnecessary cost pass-through. For policymakers, improved communication and monitoring will be key to ensuring that tax reforms achieve their intended outcomes without unintended cost inflation in urban markets.
