Without doubt, the promulgation of the Nigerian Tax Reform Acts – The Nigerian Tax Act (NTA) 2025, the Nigerian Tax Administration Act (NTAA) 2025, the Nigeria Revenue Service (Establishment) Act (NRSEA) 2025, and the Joint Revenue Board of Nigeria (Establishment) Act (JRBNEA) 2025 (cumulatively referred to as "the Reform Acts") – portends significant impact for non-resident persons (i.e., individuals and business which do not have their tax residency in Nigeria).
As an overview, the Reform Acts formally repeals various existing tax laws and consolidates all relevant tax legislations into a single legislative document. The Reform Acts, amongst other things, aim to simplify tax administration, eliminate conflicting or ambiguous tax provisions and provide a comprehensive and transparent view of tax laws, and frameworks while also enhancing revenue generation, improving compliance and fostering economic growth.
In this document, we aim to highlight some of the core provisions, which relate to Non-resident persons.
Commencement
The Reform Acts are to commence on 1st January 2026. In anticipation of this, we have prepared this memo to highlight key provisions and implications of the Reform Acts which are central to NRPs.
Imposition of Tax on Non-Resident Persons (NRP)
The Tax Reform Acts make provisions to the effect that all income, profits, or gains of a non-resident person (NRP) which accrue in or are derived from Nigeria are taxable by the Nigeria Revenue Service (the "NRS"), which holds exclusive jurisdiction over the taxation of non-resident persons. This includes profits or income from Nigeria and income from employment in Nigeria by persons not resident in any State. Notably, the NTA replaces the current concept of fixed base with the concept of "Permanent Establishment" (PE) which was hitherto only applicable under Nigeria's Double Tax Treaty. This grants a more expanded scope for the taxation of non-residents.
Importantly, the NTA clarify the definition of a non-resident, which for individuals means not being domiciled in Nigeria, lacking a habitual abode or substantial family ties in Nigeria, spending fewer than 183 days in Nigeria in any 12-month period, and not being a Nigerian diplomat abroad. A foreign company is any non-resident company or one not incorporated or centrally managed in Nigeria.
TAXATION OF PROFITS AND GAINS
Chargeable Gains
The NTA makes provisions to the effect that NRPs are subject to tax on gains derived from the disposal of assets if the gains relate to a trade, business, profession, or vocation carried on in Nigeria; assets located in or deemed located in Nigeria. Similarly, gains from indirect transfers/disposal of shares by a non-resident are now taxable at the applicable rate of 30% where such disposal results in a change in the ownership structure of a Nigerian company or of assets located in Nigeria.
Expense Deductibility
In a notable deviation from the extant provisions of the CITA which allow expenses which have been 'wholly, exclusively, reasonably, and 'necessarily' incurred for the purposes of determining taxable profits, the NTA eliminates the requirement for such costs to have been 'reasonably' and 'necessarily' incurred. Hence, only expenses which have been wholly and exclusively incurred in the production of income would be deductible for tax purposes. It introduces provisions exempting expenses incurred on assistive devices and disability related products.
It also includes provisions to the effect that any expense incurred in a currency other than the Naira may only be deducted to the extent of its Naira equivalent at the official exchange rate as published by the Central Bank of Nigeria for the relevant period. Further, any expense on which VAT is due but was not charged or in the case of imported items on which applicable import duty or levy was not paid is non-deductible for tax purposes.
With respect to the claim of capital allowance, where VAT is due under the NTA but not charged on an asset, or where import duty or levy was not paid, the relevant expenditure will not be eligible as a qualifying capital expenditure. The NTA also deletes provisions with respect to initial allowance.
Changes to Capital Gains
The NTA notably increases the capital gains rate from 10% to 30%, in alignment with the CIT rates, reducing tax arbitrage which would have been enjoyed in the classification of chargeable gains and trading income. It also integrates the gains into income tax. Hence, the taxable income of any relevant entity would comprise of its assessable profits and its chargeable gains. Similarly, the NTA subjects gains from indirect transfer of shares in Nigerian companies to tax in Nigeria. Hence, where shares are disposed by a non-resident in a manner that results into a change in the ownership structure or group membership of any Nigerian company; or of ownership of, title in, or interest in any asset located in Nigeria, gains arising from such a transaction would be a chargeable gain for the purpose of ascertaining the Company's total profits. The NTA also extends applicable chargeable assets to include digital or virtual assets and incorporeal property.
You may read the detailed document by clicking this link.
Originally published September, 2025
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.
