BusinessDay
Charles Ogwo
May 29, 2025
President Bola Tinubu, in his national address on his administration’s second anniversary on Thursday, May 29, among other things, promised to make education and healthcare, among others, attract zero percent Value Added Tax (VAT).
This VAT waiver on education could be seen as meaning that educational services such as fees, books, and school needs will no longer attract the 7.5 percent VAT cost. Hence, it will lessen the educational burdens on parents.
Ordinarily, all goods and services produced within or imported into the country are taxable except those specifically exempted by the VAT Act. The standard VAT Nigerians pay for services is 7.5 percent cost of the goods or services.
According to Isaac Agenyi, chief operating officer at Moto Business Service Nigeria Limited, “Zero tax on education by the Nigerian government in 2025 means that educational institutions and related services will be exempt from paying taxes.
“This policy aims to promote education and make it more accessible to Nigerians.”
Some key aspects of this policy include that educational institutions, including schools and universities, will not have to pay taxes on their income or profits.
“With zero tax, educational institutions may reduce their costs, which could lead to lower tuition fees and more affordable education for Nigerians.
“The tax exemption may attract more investment in the education sector, leading to improved infrastructure, better resources, and higher-quality education,” he noted.
Read also: Why Nigeria’s tax reforms matter to students and practitioners alike
Friday Erhabor, director of media and strategies at Marklenez Limited, said the zero percent VAT announced on food, education, and health, which constitutes about 80 percent of what the average and low income earners spend their income on, means7.5 percent subsidy on what students ought to spend if education were to attract VAT.
“If these items attract tax, it means students will pay an extra 7.5 percent on any service they pay for in the course of their studies, including excursions, school bus, school fees, and books.
“So in a way, the zero percent VAT is more or less a 7.5 percent subsidy on what students ought to spend if education were to attract tax, and that can make it more expensive for low-income earners who are already overburdened by the high cost of education,” he said.
Prior to January 2022, Section 23(1c) of the Companies Income
Tax Act (CITA) exempted the profits of a company engaged in educational activities of public character from income tax in Nigeria.
A similar provision in the Personal Income Tax Act (PITA) exempts the profits of individuals generated from educational activities from Personal Income Tax (PIT).
The Value Added Tax Act equally exempts educational books and materials from tax.
Income generated from primary, secondary, and tertiary educational institutions was not liable to company income tax, tertiary education tax, value-added tax, and withholding tax.
Finance Act 2021 deletes the company’s income tax exemption, while the exemption in PITA and the VAT Act remains.
Profits of companies engaged in educational activities are now liable to income tax, while the profits of individuals generated from educational activities continue to enjoy PIT exemption.
This simply suggests that Nigerians providing educational services have been enjoying tax exemptions, hence, many are wondering if there is anything new in the president’s statement.
Stanley Alaubi, senior lecturer at the University of Port Harcourt, explained that the president abolished the tax on allied service firms attached to education by the policy.
“I guess that allied services attached to education were on VAT before now, and the President wishes to abolish that; it’s a welcome development.
“It could be that the presence of the VAT on education hitherto hindered more participation than we have seen. With this new step, I believe that more people will benefit from this presidential largesse,” he said.
It is essential to note that the specifics of this policy, such as its implementation timeline and any potential conditions or exceptions, are not yet clear.
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Charles Ogwo, Head, Education Desk at BusinessDay Media is a seasoned proactive journalist with over a decade of reportage experience.
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