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On June 26, 2025, President Bola Ahmed Tinubu signed into law a historic package of tax reform legislation, marking the most comprehensive overhaul of Nigeria’s fiscal architecture in decades. The reforms, collectively known as the Nigeria Tax Reform Act 2025, comprise four landmark laws: the Nigeria Tax Act, Nigeria Revenue Service (Establishment) Act, Nigeria Tax Administration Act, and the Joint Revenue Board (Establishment) Act. This article outlines their key provisions and analyses their implications for businesses and investors operating in Nigeria’s evolving tax landscape.

  1. Nigeria Tax Act (NTA), 2025

The NTA repeals and consolidates over a dozen previously fragmented federal tax laws, including the Companies Income Tax Act (CITA), Personal Income Tax Act (PITA), Capital Gains Tax Act (CGTA), Value Added Tax Act (VAT Act), and the Stamp Duties Act. This consolidation reduces complexity and supports consistency, particularly for businesses navigating tax obligations across different sectors and transactions.

Some of the key reforms are:

  • Reclassification of Companies: Section 56 of the NTA now defines companies simply as “small” or “large”, removing the previous three-tier structure. Small companies (with annual revenue (turnover) up to NGN100 million and fixed assets (like buildings, machines, and equipment) below NGN250 million) do not have to pay Companies Income Tax (CIT), Capital Gains Tax (CGT), and the newly introduced Development Levy.
  • Development Levy: A new 4% Development Levy on assessable profits applies to all companies except small companies. This replaces multiple industry-specific taxes that applied at the same time such as the Tertiary Education Tax (3%), NITDA Levy (1%), NASENI levy (0.25%), and the Police Trust Fund levy (0.005%) thereby streamlining compliance and reducing administrative burdens.
  • Input VAT Recovery: Businesses in Nigeria can now get refunds on input VAT, which is the VAT they pay on services, capital expenditure (such as major purchases like equipment) and other business-related purchases. Essential goods and services (such as food, education, healthcare, public transport, residential rent and exports other than oil and gas) are zero-rated, meaning no VAT is charged, thereby easing inflationary impacts and enhancing affordability.
  • Capital Gains Tax: In this Act, CGT has increased from 10% to 30% for companies, aligning with Company Income Tax rates. The CGT scope is expanded to include disposals (sales and transfers) of digital and virtual assets such as cryptocurrencies and NFTs. Exemptions from CGT now exist for low-value share sales, principal residences, and reinvested gains. Gains below ₦150 million in a 12-month period (subject to a ₦10 million cap per disposal) are exempted.
  • Minimum Effective Tax Rate (ETR): Multinational corporations with global revenues of EUR 750 million or Nigerian annual revenue (turnover) above NGN 50 billion must pay a minimum 15% effective tax on net income earned in Nigeria.
  • Economic Development Incentives: The Act replaces the “pioneer status” incentive with a 5% tax credit on qualifying capital expenditure (money spent on fixed assets like machinery or buildings) incurred in any of the 36 qualifying sectors over a five-year period. This credit if not used immediately can be used in future years but must be utilised within ten years.
  • Personal Income Tax Reform: The new PIT regime ranges from 0% to 25%. Individuals earning below NGN800,000 per annum are exempt from PIT while high earners are subject to PIT up to 25%. A key reform includes a 20% rent deduction (a portion of rent you can subtract from your taxable income), capped at ₦500,000, to ease the cost of housing for employees and low-income earners.
  • Manufacturing Incentives: Manufacturers are now explicitly exempted from withholding tax (WHT) on the sale of locally manufactured goods. This reduces cash flow pressures and eliminates delays in getting back overpaid taxes, making the manufacturing sector more competitive.
  • Research and Development Deductions: Companies can deduct up to 5% of annual revenue (turnover) on qualifying research and development R&D expenses, encouraging local innovation and product development.
  1. Nigeria Tax Administration Act (NTAA), 2025

The NTAA establishes a harmonised framework for tax administration across federal, state, and local governments. It introduces clearer procedures for assessments, returns, audits, compliance, enforcement, and refunds.

Highlights:

  • Taxpayer Identification Number (TIN): TIN is mandatory for all taxpayers, to be used in all financial and tax transactions, such as bank dealings and filings with tax authorities
  • Mandatory Disclosures: Taxpayers must report tax planning arrangements that are primarily designed to obtain a tax advantage (such as reducing tax liability through legal means).
  • Digital Compliance: Banks and Virtual Asset Service Providers (VASPs) must report large transactions of over ₦25 million for individuals and over ₦100 million for companies. All VASPs must register with tax authorities.
  • Enforcement Powers: Tax authorities are empowered to inspect business premises, enter properties (with a court warrant if residential), appoint third-party collection agents, and seize assets for unpaid taxes.
  • Taxpayer Rights: The Act introduces provisions for advance rulings on transactions, negotiated settlements, and strict data confidentiality standards.
  1. Nigeria Revenue Service Act (NRSA), 2025

The NRSA formally establishes the Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS). The NRS is now responsible for administering federally collectible taxes and designated non-tax revenues such as royalties and levies.

Key Institutional Reforms:

  • Operational Autonomy: The NRS operates independently with its own board and retains 4% of non-petroleum revenues collected as cost of administration.
  • Enhanced Enforcement: The Accountant-General of the Federation may deduct unremitted taxes directly from allocations to defaulting MDAs.
  • Joint Audits: The NRS is authorised to conduct joint audits in collaboration with state and local tax authorities to ensure consistency and reduce taxpayer burden.
  1. Joint Revenue Board Act (JRBA), 2025

The JRBA fosters collaboration between federal and state tax authorities and introduces mechanisms for taxpayer protection and dispute resolution.

Key Provisions:

  • Tax Ombuds Office: An independent office created to handle taxpayer complaints, mediate disputes, and promote taxpayer rights.
  • Tax Appeal Tribunal: The Act codifies and expands the tribunal system for independent resolution of tax disputes. Each geopolitical zone must maintain a sitting tribunal. Appeals lie to the Federal High Court on points of law, i.e., legal issues, not factual disagreements.
  • VAT Revenue Sharing: The Federal Government’s share of VAT is reduced from 15% to 10%, while states and local governments now receive 55% and 35%, respectively. Revenue is allocated based on equality (50%), population (20%), and consumption (30%) to ensure fair distribution.

How the Tax Reform Act Affects Businesses in Nigeria

The new tax laws are positioned to reshape Nigeria’s business environment in the following ways:

  1. For Small and Medium Enterprises (SMEs):
  • Exemption from key taxes for small companies reduces entry barriers and encourages formalisation of informal businesses.
  • Simplified tax filing, exemption from audits, and access to digital platforms lower compliance costs.
  • Recoverable input VAT enhances cash flow and reinvestment capacity for small-scale producers and service providers.
  1. For Large Corporations:
  • Clearer rules and reduced duplication (e.g., Development Levy replacing overlapping sectoral levies) reduce compliance overheads.
  • Tax credits and R&D deductions encourage long-term capital investment and innovation.
  • Improved dispute resolution procedures and streamlined refunds reduce friction with tax authorities and enhance business planning.
  1. For Foreign Investors:
  • The adoption of global norms such as effective tax rate rules, e-invoicing, digital VAT, and controlled foreign company provisions enhances Nigeria’s competitiveness in international investment.
  • Taxpayer protections and advance rulings offer more predictability in investment structuring.
  1. For the Nigerian Economy:
  • A broader tax base and improved compliance frameworks raise Nigeria’s tax-to-GDP ratio.
  • Increased revenue collection will support infrastructure, health, and education spending.
  • Enhanced vertical and horizontal equity ensures that the tax burden is fairly distributed, with the wealthy and large corporates contributing proportionally more.

Conclusion

Nigeria’s 2025 Tax Reform Acts represent a fundamental overhaul of the country’s fiscal and revenue frameworks. These reforms signal the government’s commitment to building a modern, equitable, and business-friendly tax system that drives inclusive economic growth. For both local and international businesses, the Acts offer an improved operating environment with clear rules, stronger institutions, and meaningful incentives for growth.

References

  1. A New Fiscal Framework: Key Provisions of Nigeria’s 2025 Tax Reform Laws – https://www.nesgroup.org/blog/A-New-Fiscal-Framework:-Key-Provisions-of-Nigeria%E2%80%99s-2025-Tax-Reform-Laws
  2. PwC Nigeria: The Nigerian Tax Reform Acts – https://www.pwc.com/ng/en/assets/pdf/the-nigeria-tax-reform-acts-top-20-changes-to-know-and-top-6-things-to-do-pwc.pdf
  3. Punch Newspaper: Things to Know About Nigeria’s New Tax Laws – https://punchng.com/things-to-know-about-nigerias-new-tax-laws/
  4. Anderson Digest- Nigeria Tax Act 2025- Potential Impact on the Manufacturing Sectorhttps://drive.usercontent.google.com/download?id=1yYGMf8-nJB1fdHFgHlrPV4TkmFptl0Y9&export=download&authuser=0

Taiwo D. Adedoyin
Executive Associate.

Marvellous Alonge
Associate

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