Nigeria has entered a new era of tax legislation with the enactment of four major laws: the Nigeria Tax Act (NTA) 2025, the Nigeria Tax Administration Act (NTAA) 2025, the Nigeria Revenue Service (Establishment) Act (NRSEA) 2025, and the Joint Revenue Board (Establishment) Act (JRBEA) 2025. Together, these Acts represent the most ambitious overhaul of the country’s fiscal framework in decades. Implementation is expected from 1 January 2026.
Consolidation of the Tax Framework
The Nigeria Tax Act (NTA) brings together various elements of tax law into a single, modernised framework. One of the most significant updates is the expanded definition of a “Nigerian company.” In addition to companies incorporated locally, any entity whose central or effective place of management or control is in Nigeria will now be treated as a Nigerian company for tax purposes. This provision aligns with global tax practice and broadens the scope of taxable entities.
Capital Gains Tax has also been harmonised with Companies Income Tax at a new rate of 30% for companies, up from 10%. Indirect transfers of shares, where Nigerian assets are sold through offshore holding companies, are now taxable in Nigeria. To encourage investment, the exemption threshold for share disposals has been raised to ₦150 million within a 12-month period, provided gains do not exceed ₦10 million.
A new Development Levy of 4% of assessable profits has been introduced. This levy consolidates a range of previous sectoral charges, including the Tertiary Education Tax, Information Technology Levy, NASENI levy and the Police Trust Fund levy. Small companies and non-resident companies are exempt. Importantly, the definition of a “small company” has been revised upward: companies with turnover of ₦100 million or less and fixed assets not exceeding ₦250 million now qualify for full exemption from Companies Income Tax, Capital Gains Tax and the Development Levy.
Minimum Effective Taxation
The NTA introduces a minimum effective tax rate (ETR) of 15%, applying both to Nigerian multinationals and domestic groups with annual revenues above ₦20 billion. Companies falling below this threshold, including foreign subsidiaries of Nigerian parents, may be subject to “top-up” taxation. This measure mirrors aspects of the OECD’s global minimum tax but adopts a stricter entity-by-entity approach rather than a jurisdictional one.
In addition, new Controlled Foreign Company (CFC) rules provide that undistributed profits of foreign subsidiaries may be deemed taxable in Nigeria if they could have been distributed without harming business operations.
Personal Income Tax and Individuals
The reforms also reshape personal income taxation. A more progressive rate structure has been introduced, with individuals earning up to ₦800,000 annually now fully exempt. The definition of “residency” has been clarified to include individuals with substantial economic or immediate family ties to Nigeria, ensuring that the worldwide income of residents is taxable. The exemption threshold for severance and compensation payments has been increased from ₦10 million to ₦50 million.
Value Added Tax Reforms
The 7.5% VAT rate remains unchanged, despite earlier proposals for an increase. Instead, reforms focus on broadening the base and simplifying compliance. Input VAT may now be recovered on services and fixed assets, provided they relate to taxable supplies. The scope of zero-rated items has been expanded to include essential goods and services such as basic food items, pharmaceuticals, educational materials, electricity generation, and medical services. Oil and gas exports remain excluded, as in the previous law.
For administration, the NTAA codifies mandatory e-invoicing and fiscalisation. VAT will be shared under a revised formula: 10% to the Federal Government, 55% to States, and 35% to Local Governments, with allocations among sub-national governments determined by equality, population, and place of consumption.
Non-Residents and the Digital Economy
The Acts expand the taxation of non-resident companies (NRCs). The concept of Significant Economic Presence (SEP) is retained but streamlined to focus on digital activities directed at Nigerian customers. Profits from services performed through subcontractors or agents in Nigeria are now taxable, regardless of dependency status. The introduction of “force of attraction” rules further widens the scope, meaning that profits from related activities carried out outside a permanent establishment can still be taxed in Nigeria.
Engineering, Procurement, and Construction contracts are specifically covered: even if part of the work is executed abroad, all associated profits are now deemed taxable in Nigeria.
Non-resident shipping and airline companies face new obligations to file monthly returns, with their Nigerian profits assessed by reference to global EBIT margins if local profits cannot be determined.
Administrative and Institutional Reforms
The Nigeria Revenue Service (Establishment) Act (NRSEA) replaces the Federal Inland Revenue Service Act and establishes the Nigeria Revenue Service (NRS). The NRS is empowered to administer all federally enacted taxes and may assist states, local governments, and even foreign governments under treaty arrangements. Its funding has been increased to 4% of revenues collected.
The Nigeria Tax Administration Act (NTAA) consolidates filing obligations and expands compliance requirements. Petroleum royalties, mineral royalties, and certain airline and shipping returns must now be filed monthly. Banks and other financial institutions must report high-value transactions; ₦25 million or more for individuals and ₦100 million or more for companies directly to the tax authorities, a step expected to enhance transparency.
Finally, the Joint Revenue Board (Establishment) Act (JRBEA) introduces the Joint Revenue Board to harmonise tax administration across all tiers of government and creates the Office of the Tax Ombud to handle taxpayer complaints. This is expected to improve coordination and taxpayer protection.
Free Zones and Incentives
Free Zone entities retain tax exemptions on activities directed at export markets. However, where more than 25% of sales are made to the Customs Territory, proportional taxation applies. From 1 January 2028, all Customs Territory sales will be fully taxable, subject to a limited presidential extension.
The reforms also replace the pioneer tax holiday regime with the Economic Development Tax Incentive (EDTI). Instead of a holiday, qualifying activities in priority sectors receive tax credits equal to the tax payable on profits from such activities, available for up to five years. Unused credits may be carried forward for a further five years. Priority sectors include renewable energy, pharmaceuticals, agro-processing, mining, and technology development.
Conclusion
The 2025 Tax Reform Acts mark a decisive shift towards a modern, coordinated, and technology-driven tax regime in Nigeria. They consolidate multiple obligations, expand the tax base, and introduce new institutions to manage compliance and resolve disputes. While many of the provisions are designed to align Nigeria with international best practice, they also reflect the country’s unique economic challenges.
For businesses, individuals, and investors, the new laws present both opportunities and obligations. Their full impact will only become clear after implementation begins in 2026.
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