Nigeria has officially entered a new tax era. On 26 June 2025, President Bola Ahmed Tinubu signed the Nigeria Tax Act, 2025 (NTA) into law, alongside three major companion bills that together form the country’s most ambitious tax reform in decades. The entire framework is set to take effect from 1 January 2026, giving businesses and individuals a short but critical window to prepare.
At its core, the Nigeria Tax Act is about simplification, expansion, and enforcement. It repeals and consolidates several long-standing tax laws — including Companies Income Tax, Personal Income Tax, VAT, Capital Gains Tax, Petroleum Profits Tax, and Stamp Duties — and replaces them with a single, unified, modern tax regime applicable to both resident and nonresident taxpayers. The government’s message is clear: broaden the tax base, reduce loopholes, align with global standards, and drive sustainable economic development.
One of the most significant shifts is Nigeria’s quiet but firm alignment with global minimum tax principles. The Act introduces a 15% minimum effective tax rate (ETR) for large companies and multinational enterprise (MNE) groups, alongside a top-up tax for Nigerian parent companies whose foreign subsidiaries are taxed below that threshold. Complementing this are Controlled Foreign Company (CFC) rules, which allow Nigeria to tax undistributed profits of foreign entities controlled by Nigerian companies. Together, these measures are designed to curb profit shifting and ensure income earned globally still faces a fair tax charge.
Corporate taxation has been substantially reshaped. Small companies — defined as those with turnover of ₦50 million or less and fixed assets not exceeding ₦250 million — will continue to enjoy a 0% tax rate, while others remain taxed at 30%. However, the Act tightens the rules around deductions. Interest deductibility limits now apply to all connected-party arrangements, not just foreign ones, increasing scrutiny on intercompany financing. Capital allowances have been standardized, development levies merged into a single 4% development levy, and deductions for research and development capped at 5% of turnover.
The Act also fundamentally changes how nonresident companies (NRCs) are taxed. Tax liability is no longer based solely on physical presence or narrow definitions of permanent establishment. Instead, the law emphasizes economic substance, expanded permanent establishment definitions, and broader taxation of services linked to Nigeria — even when performed offshore. Digital services, e-commerce, and platform-based income are firmly within the tax net, with clearer rules on VAT registration, withholding, and invoicing.
For individuals, the Nigeria Tax Act modernizes personal income tax in a big way. Residency rules are tighter, worldwide income is fully taxable for residents, and taxable income now includes digital and virtual asset gains, prizes, grants, and other nontraditional income streams. Progressive tax rates now range from 0% to 25%, offering relief to low-income earners while increasing liability for higher earners. Capital gains for individuals are no longer taxed at a flat rate but are aligned with personal income tax bands, signaling a tougher stance on wealth and asset taxation.
Sector-specific reforms are equally far-reaching. Free Trade Zones and Export Processing Zones retain some incentives but with stricter export thresholds, evidence requirements, and minimum effective tax rules. Lottery and gaming companies move under the general corporate income tax regime. The petroleum and mining sectors see new rules on royalties, deductibility of decommissioning costs, gas incentives, and environmental remediation funds, all administered under a more centralized and enforcement-driven structure.
VAT and stamp duties are not left out. The Act mandates e-invoicing, fiscalization, and real-time VAT validation, expands zero-rated items (especially exports), clarifies exemptions, and tightens penalties for false claims. Stamp duties are modernized with clearer liability rules, new rates for leases, exemptions for low-value transactions, and stricter timelines for compliance.
Perhaps the most strategic shift is the replacement of the long-standing Pioneer Status Incentive with the Economic Development Tax Incentive (EDTI). This new framework abandons broad tax holidays in favor of performance-based tax credits, tied to large-scale capital investment and priority sectors such as renewable energy and infrastructure. Incentives are now harder to qualify for, more transparent, and more closely aligned with national development goals — a clear signal that Nigeria wants quality investment, not just volume.
In practical terms, the Nigeria Tax Act, 2025 is a game changer. It tightens compliance, closes historic loopholes, and raises the bar for both local and foreign taxpayers. Businesses operating in Nigeria must urgently review their tax structures, transfer pricing policies, financing arrangements, invoicing systems, and incentive planning ahead of 2026. Individuals, especially high earners and digital asset holders, should also reassess their tax exposure under the new rules.
Bottom line: this law is not cosmetic reform — it’s a full system upgrade. Those who prepare early will find opportunities in the new framework; those who ignore it risk higher taxes, penalties, and regulatory friction. The clock is ticking, and January 2026 is closer than it looks.