Introduction
On June 26, 2025, the Federal Government of Nigeria signed into law a suite of tax reform legislation that consolidates and replaces over a dozen laws. The reforms are anchored on four principal Acts: Nigeria Tax Act (Tax Act); Nigeria Tax Administration Act (Tax Administration Act); Nigeria Revenue Service Act (NRSA); and Joint Revenue Board Act (JRBA). While the NRSA and JRBA are already operational, the Tax Act and the Tax Administration Act will take effect on January 1, 2026. For a detailed overview of these reforms, please see our newsletter here.
In the light of these reforms, businesses must take a new look at their current structures and, where necessary, strategically restructure to prevent inefficiencies, ensure compliance, and capture available opportunities.
In this newsletter, we highlight key reforms and strategies that businesses can adopt to operate more efficiently.
How Businesses Should Restructure in Response to Key Reforms
1. Business Classification and Tax Exposure
The Tax Act classifies businesses by turnover and asset size.
a. Small business:
- refers to businesses (excluding businesses providing professional services) with annual turnovers not exceeding ₦100 million and fixed assets below ₦250 million – a significant increase from the previous turnover threshold of ₦25 million;
- small businesses are exempt from Corporate Income Tax (CIT), Capital Gains Tax (CGT), and the Development Levy;
- in addition, micro and small enterprises that formalize their operations with the Corporate Affairs Commission (CAC) can access new incentives, including a start-up tax credit and temporary tax holidays for businesses in priority sectors such as agriculture, manufacturing, and technology.
b. Larger business:
- refers to businesses with annual turnover exceeding ₦100 million and fixed assets above ₦250 million;
- larger companies are subject to payment of Corporate Income Tax (CIT), Capital Gains Tax (CGT), and the Development Levy;
- larger companies may benefit from reduced CIT rate from 30% to 25%, but this applies only to qualifying entities in approved sectors and remains subject to presidential discretion.
Key Business Consideration: In view of the foregoing, businesses may wish to assess whether restructuring into smaller entities or special purpose vehicles could unlock these benefits. The Tax Administration Act, however, introduces strict anti-avoidance rules, and as such any restructuring must be carefully designed to withstand regulatory scrutiny.
2. Capital Gains Tax and Holding Structures
The Tax Act increases the CGT rate from 10% to 30%. The scope of CGT has also been expanded to cover indirect offshore transfers of Nigerian assets, including shares in Nigerian companies.
Key Business Consideration: In view of the foregoing, multinational and investment holding groups should carefully review their offshore structures. In some cases, shifting asset ownership to Nigeria or restructuring holdings may be necessary to reduce exposure under the new tax rules.
3. Digital Tax Infrastructure
The NRSA introduces mandatory e-invoicing and real-time VAT reporting, marking a shift to a fully digital tax administration system. These measures, designed to improve transparency and curb tax evasion, will significantly alter how companies manage their reporting obligations.
Key Business Consideration: Businesses should:
- invest in compliant accounting software;
- train their finance teams;
- update invoicing and contracting frameworks; and
- engage legal and tax advisors to review operational processes and confirm that systems are fully aligned with the new digital requirements.
4. Incentives for Economic Development
The Tax Act introduces a 5% annual tax credit for qualifying expenditure on long-term assets in key sectors such as agriculture, renewable energy, and manufacturing. This replaces the former Pioneer Status regime.
Key Business Consideration: Businesses planning to invest in these sectors may consider channeling their funding through eligible entities or joint ventures to maximize access to tax credits. It is important to conduct prior due diligence on the entities and maintain proper supporting documentation. This is essential not only to claim the credits but also to safeguard them during regulatory reviews.
5. Compliance and Banking Integration
The Tax Administration Act makes a Tax Identification Number (TIN) mandatory for all taxable persons. Banks are now required to verify TINs before opening or maintaining accounts, and failure to comply could restrict access to banking services.
Key Business Consideration: Businesses must immediately verify that all group entities, directors, and beneficial owners are properly registered with the Nigeria Revenue Service. A compliance audit at this stage will prevent operational disruptions and reputational risks once enforcement begins.
Conclusion
The 2025 tax reforms represent a shift in Nigeria's fiscal landscape, reshaping compliance requirements and creating new opportunities for growth. Businesses that take early steps to review their structures and align with the new framework will be better positioned to stay compliant, efficient, and competitive. The content of this newsletter is, however, not exhaustive and should not be taken as legal or financial advice. Businesses are encouraged to seek tailored professional guidance to understand the specific impact on their operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
