Dear Creatives: What The Nigeria Tax Reform Acts Mean For Your Business

Dear Creatives,

You may have heard about the new tax reform Acts passed by the National Assembly and signed into law by His Excellency, President Bola Ahmed Tinubu GCFR, in June 2025. These reforms come in four key pieces of legislation: the Nigeria Tax Act, the Nigeria Tax Administration Act, the Joint Revenue Board of Nigeria (Establishment) Act, and the Nigeria Revenue Service (Establishment) Act. Taken together, these pieces of legislation represent the most significant overhaul of Nigeria's tax framework in decades.

These reforms are particularly important for the creative sector, given the sector's rapidly growing role in Nigeria's economy. Indeed, one could reasonably argue, even in the absence of precise national statistics, that the creative industry (spanning music, film, gaming, fashion, streaming, photography, comedy, DJ services, and related fields) is among Nigeria's largest sources of employment, especially for young people.

With Nigeria's youthful population and the increasing shift toward digital and creative income streams, government policies are beginning to reflect this reality. The new tax reform Acts introduce provisions and concessions designed to support the growth, sustainability, and formalization of creative businesses.

In this article, we have tried to do two things: first, guide creatives, using practical case studies, on how their taxes may be computed and reported under the new tax regime. Secondly, highlight key concessions within the law that creatives can leverage to reduce tax costs and strengthen the long-term viability of their businesses.

Case Study A: Ayo, The Influencer

At 22, Ayo decides to turn his content creation into a full-time business pursuit, posting consistently on TikTok and YouTube under the content name 'Ays Lifestyle'. His goal is for content creation to become his main source of income through ad revenue, gifts from TikTok lives, paid subscriptions and brand collaborations. Ayo has not registered any entity with the Corporate Affairs Commission (CAC) for the purpose of running his business – 'Ays Lifestyle'.

After a period of posting consistently on TikTok and YouTube, payments begin to flow in, and questions arise around how Ayo should approach his tax compliance obligations in Nigeria.

What should Ayo do

1. Register for Tax and Obtain a Taxpayer Identification Number (Tax ID): Ayo should first ensure he is registered for tax purposes in Nigeria and has a Tax ID. This is a requirement under the Nigerian Tax Administration Act. Presently, the Joint Revenue Board in collaboration with the Nigerian Revenue Service has deployed a portal where taxpayers can generate their tax ID. Ayo can visit this portal at "https://taxid.nrs.gov.ng" and input his National Identification Number (NIN) to generate his Tax ID. This Tax ID can be used by Ayo in meeting his tax obligations such as making tax payments.
2. Compute His Personal Income Tax: Ayo should proceed to calculate his income tax. It is instructive to note that income tax is payable every year and the tax is paid on the income earned in the previous year. For example, in the year 2026, Ayo will need to calculate taxes on all the income he has earned from 1^st January 2025 – December 31^st, 2025.

We have outlined below a simple guide to how Ayo should calculate his income tax:

• Ayo should first sum up all the income he earned in the previous year (for example, earnings from gifts on TikTok live, brand collaborations, paid subscriptions from YouTube and any other revenue)
• Ayo should then deduct from such income, the following items:
  • The expenses he incurred for the purpose of his business (for example, if Ayo bought data strictly for the purpose of his business such as posting on TikTok and YouTube, then Ayo can include such expense here. Also, if Ayo bought fuel that he uses strictly for his business, then it should be included here [Please note that personal expenses are not to be included here]). Also, it is important that all expenses claimed are properly supported by documentation. Accordingly, Ayo should retain relevant receipts evidencing the expenses or maintain bank statements showing the corresponding deductions.
  • Rent relief (this is 20% of the rent Ayo paid in the previous year. This is up to a maximum of N500,000)
  • National Housing Fund Contribution (this is assuming Ayo makes such contribution)
  • Nigerian Health Insurance Scheme (this is assuming Ayo contributes to the Scheme)
  • Contributions to the National Pensions Scheme (Assuming Ayo contributes to the Scheme)
  • A portion (typically 10% - 25% every year depending on the capital item) of the capital items Ayo purchased for the purpose of his business. For example, laptops purchased strictly for his business, camera's purchased strictly for his business. It is very important for Ayo to ensure that at the point of purchasing these capital items, the invoice or receipt shows a VAT element, and he pays the cost of the capital item in addition to the VAT, to the supplier. Ayo should retain these documents for reference purposes, when the tax authorities request these documents in the future.
• The balance from the above is called the taxable income of Ayo, which will then be subject to tax.
• Nigeria operates a progressive tax system. This means that the tax rate applicable to a person's income increases as the person's income increases. For example, if after the above calculation, Ayo's taxable income is less than N800,000, Ayo will not pay any tax. This is a significant improvement from the previous tax legislation as it returns more money (which Ayo could have otherwise paid in taxes) to Ayo to invest in his business. Please note that where Ayo's taxable income is more than N800,000, the balance, over and above N800,000 will be subject to income tax. Please see in the notes below, the applicable tax rates for different tax bands¹.

3. File and Pay Tax to the Relevant State Tax Authority: After Ayo has calculated his taxes, Ayo may then proceed to remit his taxes to the appropriate state tax authority where he is resident. For example, if Ayo is resident (lives) in Lagos, he should remit his taxes to the Lagos State Tax Authority using this link (https://etax.lirs.net/), if Ayo is resident in Port Harcourt, he should ensure he remits his taxes to the Port Harcourt State Government using the link (https://riversbirs.gov.ng/) etc. Please see in the notes, the link² to the website of some tax authorities where taxes should be remitted.

It is important to note that Ayo's income tax should be paid on or before the due date of filing his income tax returns, which is typically the 31^st of March of every year.

Case Study B: Ayo, The Influencer

In this case study, we are assuming the same facts as Case Study A, but in this instance, Ayo has now registered 'Ays Lifestyle' with the Corporate Affairs Commission (CAC) as a business name.

What should Ayo/ "Ays Lifestyle" do

1. Register for Tax and Obtain a Taxpayer Identification Number (Tax ID): Ays Lifestyle should register for tax with the relevant State tax authority where the business is resident. This is typically the state in which the business maintains an office. Where the business does not operate from a fixed office, residence will generally be determined by the state from which the business derives all or part of its income.
   
   As discussed in Case Study A, Ays Lifestyle may visit the referenced website to generate the business's Tax ID. The portal will require the business's CAC registration number to complete the Tax ID generation process.
   
   Ayo should also visit the tax office of the relevant state to formally set up and activate the business's tax profile with the State Tax Authority. This step finalizes the tax registration process.
2. Tax Computation: The tax calculation and payment procedure are the same as discussed in case Study A.
3. VAT Consideration: Given that Ayo will be working with brands, promoting their products or services on his platforms in exchange for payment, Ayo will be invoicing for his work. It is important to note at this point that small businesses, that is, businesses that earn a gross turnover of N100 million or less and total fixed assets of not more than N250 million are exempt from charging VAT on their supplies. Therefore, where 'Ay Lifestyle' does not meet the above threshold, the business will not be required to charge VAT on their invoices. However, once the threshold above is exceeded, 'Ay Lifestyle' will be required to charge VAT on its invoice to its customers.

Note that it is important that Ayo maintains proper documentation of all his business activities. This will not only aid in accurately computing his taxes but will also help during an audit by the tax authorities where the tax authorities may request certain documentation. Where those documentations are not available, Ay Lifestyle may face additional taxes.

Finally, it is also important that Ayo maintains a separate account (a business account) for 'Ays Lifestyle'. In that account will be warehoused, the business income from 'Ays Lifestyle' as well as all expenses incurred by the business. This will help isolate the activities of 'Ays Lifestyle' from the personal income and expenditure of Ayo.

Although Ayo will be subject to tax on all his income (personal and business), this separation is necessary for ease of calculation of Ayo's taxes as well as audit purposes.

Case Study C: Banke, CEO of AfroWave Motion and Music

Banke is the CEO of AfroWave Motion and Music ('AfroWave'), an entity operating as a music and film production house in Nigeria. AfroWave is newly incorporated with the CAC as a company limited by shares. AfroWave earns income from its music and film productions, digital subscriptions, brand sponsorships, licensing, royalties as well as other related income. Revenue from AfroWave's business in the 2026 financial year, its first year of operations, is NGN 75 million and the companies fixed assets (computers, production equipment etc.) is NGN100million.

What should AfroWave do to remain tax compliant

• Register for Tax and Obtain a Taxpayer Identification Number (Tax ID): AfroWave should register for tax with the Nigerian Revenue Service (previously, the Federal Inland Revenue Service). The modality for the registration is similar to what we have described in Case Study B. AfroWave will also be required to activate its profile on the Tax ProMax portal of the Nigerian Revenue Service. The TaxProMax is the portal AfroWave will use to make federal tax remittances and filings.
• Compute its taxes and file accordingly: AfroWave should proceed to calculate and remit its taxes to the Nigerian Revenue Service. However, Afrowave may not need to pay taxes on its income and this is why.

The tax reforms acts introduced a revenue threshold below which a company will not need to pay income tax. According to the Nigeria Tax Act, a company that earns gross turnover of N100 million or less and total fixed assets of not more than N250 million, is exempt from paying income tax.

This means that AfroWave (with a turnover of N75million and fixed assets of N100million) will not need to pay tax on its income. This is a significant improvement from the previous tax regime wherein Afrowave may have paid taxes (at 20%) on its taxable income. This policy change underscores the government's commitment to allowing small companies scale by giving them back the tax cost they would have otherwise remitted to the government.

Please note that in subsequent years, where Afrowave's income exceeds the threshold prescribed above, the company will pay tax at 30% on its taxable profits.

• It is important to note that AfroWave will be required to file its income tax returns with the Nigerian Revenue Service, whether or not it is exempt from paying taxes. The relevant filings should be completed on the Tax ProMax portal of the NRS.
• Like we have discussed in case study B, AfroWave will not need to include VAT on its supplies to its customers given that it is a "small company". This means that when AfroWave is charging for the performance fee of its artists, or licensing fees for the use of sounds by its artists, VAT will not be included on those costs. However, where the revenue threshold is exceeded, AfroWave must then charge VAT on the invoices it issues to its customers.
• Also, given that AfroWave is a small company, in instances where the company showcases its movies in a Cinema house, the revenue from the cinema house should not be subject to withholding tax. This implies that AfroWave should be able to fully recover their cinema earnings.

Tax Concessions as well as other considerations

1. Economic Development Tax Incentive: The Nigeria Tax Act introduced the Economic Development Tax Incentive (EDTI). The EDTI is designed to encourage investment in priority sectors identified by the government, including film, music, and digital content production.
   
   The EDTI works like a tax credit system. This means that qualifying companies may offset their income tax in a year with the tax credit available to them from the EDTI. The tax credit is typically 5% of the qualifying capital expenditure incurred by the Company. It is important to note that this tax credit is available for a maximum period of 5 years.
   
   Please note that this incentive is available only to incorporated companies, thereby making corporatization attractive for creative businesses.

2. Small company income tax exemption: As noted earlier, creative businesses that operate through an incorporated company structure will benefit from the small company exemption under the Nigeria Tax Act. Under this provision, companies with annual gross turnover below the prescribed small-company threshold are exempt from income taxes.
   
   This exemption significantly enhances cash flow and business sustainability, particularly in the early stages of a creative enterprise when revenues are still stabilizing and reinvestment needs are high. It allows such businesses to retain a greater portion of their earnings for working capital, content development, equipment acquisition, talent costs, and market expansion.
   
   The exemption also reinforces the attractiveness of corporatization for creative entrepreneurs, as it combines the commercial credibility and growth advantages of a company structure with a reduced initial tax burden. Creative businesses should therefore monitor their turnover levels and maintain proper records to support qualifications for this status where applicable.
   
   Separately, we note that the relatively high asset threshold prescribed in the law (₦250 million) may create a misalignment with the turnover threshold of ₦100 million. In practical terms, it may be uncommon to find businesses that maintain asset bases approaching ₦250 million while generating annual revenues of ₦100 million or less. This structural mismatch may inadvertently narrow the category of businesses intended to benefit from the simplified or small business regime.
   
   In light of the foregoing, we recommend that the Government re-examine the turnover threshold with a view to aligning it more closely with current market realities. Specifically, consideration may be given to revising the turnover threshold upward, to reflect the evolving nature of modern businesses.

3. Full recoverability of VAT: Prior to the enactment of the Nigeria Tax Reform Acts, many creative businesses (such as AfroWave and Ays Lifestyle) were unable to recover VAT incurred on key operating costs, including advertising and campaign spend, local streaming and distribution fees, publishing costs, and similar production-related services. Because such VAT was not creditable against output VAT, it effectively became an additional cost of doing business.
   
   Under the reform framework, VAT incurred on qualifying business inputs is now recoverable against the VAT charged on taxable supplies made by the creative business. This means that VAT paid on legitimate business expenses can be offset as input VAT, thereby reducing the overall VAT burden and improving cost efficiency.
   
   The full or expanded recoverability of input VAT is particularly significant for the creative sector, where production, marketing, and distribution activities are often VAT-intensive. Creative businesses should therefore ensure proper VAT invoicing and record-keeping to support input VAT claims and maximise the benefit of this reform.

Conclusion:

The evolving tax framework should not be viewed as hostile to the creative and entertainment sector; rather, it reflects the government's recognition of the sector's growth and increasing economic significance. For creatives, a sound understanding of the new tax laws is essential to enable informed decision-making going forward.

Clarity on how tax obligations apply across different business structures will help both incorporated entities and individual creatives identify the taxes relevant to their activities, plan appropriately, and minimize exposure to compliance risks.

Footnotes

1. a) First N800,000 at 0%, Next N2,200,000 at 15%, Next N9,000,000 at 18%, Next N13,000,000 at 21%, Next N25,000,000 at 23% and Above N50,000,000 at 25%.

2. Ogun state – (OGIRS - Ogun State Internal Revenue Service)

Federal Capital Territory – (FCT-IRS | Tax Today, Build Tomorrow)

Oyo State – (Self Service || Home)

Gombe State – (Gombe State Internal Revenue Service - GIRS Platform)

Delta State – (Delta IRS – Delta)

The opinion expressed in this article is solely personal and does not represent the views of any organization or association to which the authors belong.

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.