A Discourse Of The Key Provisions Of The Nigerian Tax Reform Acts, 2025.

1. INTRODUCTION:

Following the perceived need to enhance the process of tax administration, increase compliance, optimise revenue generation, and ensure fairness and equity in Nigeria, President Bola Ahmed Tinubu signed four bills on taxation, fiscal and revenue reforms into law on 26th June 2025.

2. THE NIGERIAN TAX REFORM ACTS, 2025.

The Nigerian Tax Reform bills, now Acts of the National Assembly, are as follows:

i. The Nigeria Tax Act, 2025 (NTA):

The NTA repeals several tax laws including the Capital Gains Tax Act, the Casino Act, the Companies Income Tax Act, the Industrial Development (Income Tax Relief) Act, Personal Income Tax Act, Stamp Duties Act, Value Added Tax Act and the Venture Capital (Incentives) Act to amend the Nigeria Export Processing Zones Act, the Oil and Gas Free Trade Zone Act, the National Information Technology Development Agency Act.¹ The NTA consolidates statutory provisions on taxation of income, transactions and instruments.

ii. The Nigeria Tax Administration Act, 2025 (NTAA):

The NTAA is focused on the framework for tax collection and administration. It provides statutory processes and procedures for assessment, collection and administration of tax.

iii. The Nigeria Revenue Service (Establishment) Act, 2025 (NRSEA):

The NRSEA repeals the Federal Inland Revenue Service (Establishment) Act² and establishes the Nigeria Revenue Service (NRS)³ as a replacement for the Federal Inland Revenue Service (FIRS). The mandate of the NRS includes the assessment and collection of revenue due and payable to the Government of Nigeria.⁴

iv. Joint Revenue Board of Nigeria (Establishment) Act, 2025 (JRBNEA):

This act establishes the Joint Revenue Board,⁵ the Tax Appeal Tribunal,⁶ and the Office of the Tax Ombud,⁷ with the aim of ensuring a harmonised and coordinated approach to the settlement of tax disputes and disputes arising from revenue administration in the country.⁸ In view of this encompassing objective, the Joint Revenue Board is statutorily empowered to entertain, deliberate and settle disputes between the NRS and tax authorities of the federating states.⁹

3. KEY PROVISIONS:

Some of the innovative provisions of these recent legislations are enumerated and discussed as follows:

i. Corporate Tax:

A Small company was previously defined as a company with annual gross turnovers of NGN25million have been redefined to mean a company with annual gross turnovers of NGN100Million and below and total fixed assets not exceeding NGN250Million. There is, however, a caveat, any business providing professional services cannot be classified as a small company under the Act.¹⁰ This redefinition may be attributable to the rising cost of doing business, the inflation rate or Naira devaluation. Small companies are exempted from corporate income tax.¹¹ Large companies, on the other hand, are still required to pay income tax at the rate of 30%.¹²
Also, the modalities for claiming capital allowance have been amended. Following this recent legislation, initial allowance is no longer claimable on assets, and new restrictions are introduced on allowance claimable on qualifying capital expenditures (QCEs). Profits or gains derived from digital or virtual asset transactions are now taxable.¹³ Nigerian companies will now have to pay a minimum effective tax rate (ETR) of 15% of their net income if they are part of a multinational group with an annual turnover of NGN50 Billion or more, or if their total group turnover is EUR750 Million or more.¹⁴
A company registered in Nigeria that has any foreign subsidiary taxed below the 15% threshold will be compelled under the new law to make a supplementary tax payment to make up for the shortfall.¹⁵ For company liquidators, there is now an obligation to ensure that all taxes that are due, accrued and unpaid are settled or paid before distributing the assets of the company.¹⁶ Any erring liquidator could bear personal liabilities for the outstanding taxes¹⁷.

ii. Personal Income Tax:

Under the NTA, individuals with annual income of N800,000 (Eight hundred thousand Naira) or less are exempt from paying income tax or Capital Gains Tax (CGT).¹⁸ Payment not exceeding ₦50,000,000 obtained as compensation for employment loss or injury suffered in the course of discharge or employment duties is also tax-exempt.¹⁹ Individuals with annual income higher than the N800,000 (Eight hundred thousand Naira) threshold will be taxed up to a maximum of 25%.²⁰
Under the new regime, taxation of employment income is largely predicated on the residence of the taxpayer, i.e. whether the individual is resident in Nigeria or whether the employment duties are performed in Nigeria without incurring any tax liabilities in the actual country of residence.²¹ That said, certain actions performed by a non-resident company or by its related parties may still be deemed to fall within the non-resident company's permanent establishment (PE) in Nigeria for tax purposes, notwithstanding the absence of any physical performance within the PE itself. Also, revenue stemming from Engineering, Procurement, and Construction (EPC) contracts is subject to Nigerian tax even when elements of the work are executed under distinct contracts or outside the Nigerian territory.

iii. Capital Gains Tax:

Small companies are also exempted from Capital Gains Tax (CGT). Interestingly, the NTA increases CGT rate to 30% for "large" companies.²² Previously, CGT was chargeable at the rate of 10% under the repealed Capital Gains Tax Act.
Likewise, CGT rate for individuals is now aligned with the modalities for computing personal income tax under the newly enacted NTA.
Shares in a Nigerian company are exempted from CGT where the proceeds of disposal of such shares are less than ₦150M and the chargeable gain does not exceed ₦10M in any 12 consecutive months, or the shares are transferred between an approved borrower and a lender in a regulated Securities Lending Transaction.²³
Also, CGT will not be applicable where the proceeds of such transfers are reinvested in the acquisition of shares in the same or another Nigerian company within the same year of assessment. CGT will be chargeable proportionately on the portion of the proceeds which are not so reinvested.

iv. Development Levy:

The NTA introduces a development levy which companies are required to pay at the rate of 4% of their assessable profits (i.e. profits before deducting tax, depreciation and losses).²⁴ Again, small companies are exempted from paying development levy.²⁵
The Development Levy consolidates the Tertiary Education Tax (TET), National Information Technology Development Agency (NITDA) Levy, the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy. i.e. the development levy is a replacement for these abolished earmarked taxes.²⁶
One major drawback with this development is that the levy is payable by all "large" companies irrespective of the sector in which they operate. This creates an additional burden on companies that were not liable to pay any or some of the abolished earmarked taxes because of the sector in which they operate or the nature of their business.

v. Value Added Tax (VAT):

The current VAT rate (i.e. 7.5%) is preserved under the NTA.²⁷ Under the new law, more items deemed essential to daily living have been designated as "zero-rated items" for VAT purposes, including basic food items, tuition payable to academic institutions, medical products, pharmaceutical products, educational materials, medical equipment, health care services, electricity distribution, exports that are not oil and gas, etc.²⁸
Input VAT is now claimable on all purchases, including VAT paid by businesses for service delivery.²⁹
VAT fiscalisation rules are contained in the NTA, and businesses are now statutorily required to comply with e-invoicing requirements and modalities.³⁰ Although the fiscalisation requirement is expected to enhance VAT compliance and reduce tax evasion, the proposed fiscalisation system raises concerns about privacy and data protection. The Nigeria Revenue Service, being a data controller and processor, will be expected to abide by global and highest attainable standards of data protection. Also, data protection principles of lawfulness, fairness, transparency, integrity, accuracy, proportionality, and data minimisation, amongst others, should be entrenched into the process by design and default.
The Acts increase state and local government area VAT allocations to 55% and 35%, respectively, while decreasing the Federal Government's share from 15% to 10%.³¹
Fifty percent (50%) of the VAT revenue assigned to states and local governments is shared on the basis of equality, 20% is shared based on population, and the remaining 30% is shared based on place of consumption.³²
There has been a significant increase in non-compliance penalties and the introduction of novel penalties that did not exist under the old regime.³³ Under the NTAA, taxpayers will incur penalties if they award contracts to any person or company that is not registered for tax purposes in accordance with applicable laws.³⁴
Taxpayers could also incur penalties where they refuse or fail to grant access for the deployment of technology, etc.³⁵

vi. Tax incentives:

Ideally, taxation and fiscal policies are not the only factors investors consider when taking strategic decisions; however, taxation is a strategic tool for incentivising economic development. The recent tax reform seeks to engender and incentivise economic development activities by providing the following incentives:

Income generated by companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry, dairy, cocoa processing and manufacturing of animal feeds will be exempt from income tax for the first five (5) years from the commencement of business.³⁶
Pioneer status incentives have been replaced with an "Economic Development Incentive" (EDI), which essentially grants a tax credit of 5% per annum for 5 years on qualifying capital expenditure purchased by eligible companies within 5 years, effective from the production date. Unutilized credits can be carried forward for another 5 years only.³⁷
exemption from Withholding Tax (WHT) on the sale of locally manufactured goods.³⁸

vii. Tax Planning & Anti-Avoidance Measures:

Under the NTAA, businesses are required to voluntarily inform tax authorities of any tax planning scheme or tools geared towards deriving tax advantage, tax benefits or gains from a favourable tax outcome.³⁹ This includes reducing, eliminating or minimising tax exposures, optimising utilisation of tax assets and claims for tax repayments, postponing or accelerating tax payments, avoiding statutory tax deduction or remittance obligations, and obtaining new or enhanced tax reliefs.
Additionally, the tax authorities are empowered to disregard tax avoidance schemes or arrangements or revoke attendant tax benefits associated with such schemes or arrangements if they are deemed artificial or contrary to objective statutory intendment.⁴⁰
Section 29 of the NTA empowers the tax authority to impose presumptive tax. The section expressly provides that where for all practical purposes, the income of a tax payer cannot be ascertained or records are not kept in such a manner as to enable proper assessment of income, then such tax payer will be assessed on such terms and conditions as may be prescribed by the Minister on the advice of the Joint Revenue Board in a regulation under a presumptive tax regime. Presumptive tax is a simpler way for tax authorities to figure out how much tax is payable when the real income of a taxpayer cannot be easily ascertained. This often happens when there are no proper financial records or if the records are insufficient. Instead of using official accounting books, the tax authority can rely on other indicative clues like business turnover, benchmarking, the type of business, comparative analysis, the value of assets, etc., in raising a presumptive tax assessment.
The NTA also introduces the Controlled Foreign Corporation Rules (CFC rules) to stop companies from shifting or keeping profits away. If a Nigerian company's foreign subsidiary company retains profits that ought to have been distributed as dividends, etc, without any negative or adverse impact on its business, such profits will be treated as if they were distributed and will be taxed in Nigeria.⁴¹

viii. Tax Collection and Administration:

The Federal Inland Revenue Service (FIRS) has been renamed the Nigeria Revenue Service (NRS) under the NRSEA to reflect its responsibilities as the body to assess, collect and account for revenue due to the federation.⁴²
The NRSEA also provides for the autonomy of State Internal Revenue Services and the framework for joint audits or securing the support of the NRS in tax collection and administration.
Under the newly enacted NTAA, all taxpayers, including public institutions and government agencies at the federal, state, and local levels, are required to register and obtain a Tax Identification Number.⁴³
Also, non-resident individuals or entities deriving income from business activities in Nigeria (aside from passive investment income) are also required to register for tax purposes and obtain a TIN.⁴⁴
Financial services providers are now obligated to drive and ensure compliance with this registration requirement. Businesses providing financial services are now required to ensure that their customers who are required to pay or remit taxes under applicable laws provide a TIN.
The Tax Ombuds office is established under the Act to communicate and engage with the tax authorities on behalf of taxpayers as an independent body for the purpose of reviewing or settling complaints concerning taxes, levies, fees, or other regulatory charges.⁴⁵
The Joint Revenue Board is also established under the JRBNEA as a platform or forum for collaborative engagement amongst tax authorities. The Joint Revenue Board is made up of representatives from the State Revenue Services, the NRS, and relevant stakeholders. The JRBNEA is principally aimed at:⁴⁶

aa. Providing a legal and institutional framework for the harmonisation and coordination of revenue administration in Nigeria.
ab. Providing a mechanism for efficient tax dispute resolution; and
ac. Promoting and safeguarding the rights of the taxpayers.

4. CONCLUSION:

The NTA become effective on 1st January 2026, allowing six months for transition. In the meantime, it is important for taxpayers to be mindful of their status, considering the definition of small companies under the NTA and other tax exemption thresholds prescribed under the Act. Rebuild and rethink tax considerations and self-assessment models to factor in the incidence of the novel provisions on CGT, development levy, progressive PIT, CFC Rule and VAT input recovery, etc.

It is important for businesses to take a close look at their tax plans and strategies. One of the objectives of the reforms is to ensure fairness and equity in the tax administration system, and eligible businesses can take advantage of the innovative provisions of the Acts geared towards achieving these noble virtues. However, there are other provisions that impose new tax obligations or burdens. Implementation of the Acts is the next major "milestone." Many of the changes introduced under the new tax laws are principally targeted at addressing the 'mischief' perceived in the course of practical implementation of the repealed tax laws. On the part of business leaders, taxpayers and tax administrators alike, a lot hinges on understanding these changes brought about by the reforms and getting ready for them.

Footnotes

1. NTA 2025, preamble & long title.

2. NRSEA 2025, preamble.

3. NRSEA, section 3.

4. NRSEA, section 4.

5. JRBNEA 2025, section 3.

6. JRBNEA 2025, section 23.

7. JRBNEA 2025, section 36.

8. JRBNEA 2025, preamble.

9. JRBNEA 2025, section 5(b) and (d).

10. NTA 2025, section 202 – definition section.

11. NTA 2025, section 56(a).

12. NTA 2025, section 56(b).

13. NTA 2025, section 4(1)(i).

14. NTA 2025, section 57.

15. NTA 2025, section 57(1) and (2)(a).

16. NTAA 2025, section 53(1)

17. NTAA 2025, section 53(2)

18. NTA 2025, section 58 and paragraph (a) of the Fourth Schedule.

19. NTA 2025, section 50.

20. NTA 2025, section 58 and paragraph (b)-(f) of the Fourth Schedule.

21. NTA 2025, section 13(2)(b).

22. NTA 2025, section 39.

23. NTA 2025, section 34(1)(a)(i).

24. NTA 2025, section 59(1).

25. NTA 2025, section 56(a).

26. NTA 2025, section 59(3).

27. NTA 2025, section 148.

28. NTA 2025, section 187.

29. NTA 2025, section 156.

30. NTA 2025, section 153.

31. NTAA 2025, section 81(1).

32. NTAA 2025, section 81(2).

33. NTAA 2025, Chapter Four, Parts 1 & 2; covering sections 100 – 137.

34. NTAA 2025, section 100.

35. NTAA 2025, section 103.

36. NTA 2025, section 163(1)(o).

37. NTA 2025, Chapter 8, Part 2.

38. NTA 2025, sections 186(1)(e) & (f); 187(e)-(g).

39. NTAA 2025, section 30.

40. NTAA 2025, section 47.

41. See NTA 2025, section 6.

42. NRSEA, sections 40, 41, and the Preamble.

43. NTAA 2025, Chapter 1, Part 2 – comprising sections 4-10.

44. NTAA 2025, section 6.

45. JRBNEA, section 36.

46. JRBNEA, section 41.

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.