DOWNLOAD: The New Nigeria’s Tax Act (NTA), 2025
President Bola Tinubu on Thursday signed into law the four new tax bills recently passed by the National Assembly, describing the new laws as pivotal to the success of the administration’s reforms and the country’s prosperity.
The bills are the Nigeria Tax Bill (Ease of Doing Business), which aims to consolidate Nigeria’s fragmented tax laws into a harmonised statute; the Nigeria Tax Administration Bill, which will establish a uniform legal and operational framework for tax administration across federal, state, and local governments.
Others are the Nigeria Revenue Service (Establishment) Bill, which repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven national revenue agency— the Nigeria Revenue Service (NRS); and the Joint Revenue Board (Establishment) Bill, which provides for a formal governance structure to facilitate cooperation between revenue authorities at all levels of government.
The Nigeria Tax Act (NTA or “the Act”) repeals certain existing tax laws and consolidates the legal framework governing taxation in the country into a single legislation for simplicity and improved tax administration. Consolidating tax provisions into one single document will also help to eliminate overlapping, conflicting or ambiguous provisions that can result in unnecessary complexity and uncertainty. It will, therefore, help to provide a clear and comprehensive view of tax laws in the country and enhance transparency.
The overarching objective of the Act is to streamline Nigeria’s tax system by reducing the number of taxes to a manageable single-digit figure. This reform is aimed at enhancing revenue generation, simplifying compliance procedures, and addressing regional disparities in tax administration.
A major thrust of the reform is the elimination of nuisance taxes – those that yield minimal revenue, are costly to administer, and disproportionately affect the poor and small businesses. The focus will now shift to high-yielding and broad-based taxes that are relatively easy to collect. The Act also seeks to merge taxes and levies imposed on the same or substantially similar tax bases to reduce duplication and inefficiency.
To ensure long-term impact, the Act aims to institutionalise tax harmonisation efforts; thereby ensuring that the simplified structure is sustainable across all levels of government. While the reform has been praised for its potential to modernise Nigeria’s tax landscape, it has also sparked diverse reactions regarding its possible economic and social consequences.
Key changes introduced by the Bills
Early indications of the Bills passed by the National Assembly reveal that there have been several amendments made to the version sent by the President for consideration. The most significant amendments are the decisions to retain the VAT rate at 7.5% and the corporate income tax rate at 30%. The position on excise duty on services and/or introduction of other taxes, levies or surcharges on services and other items remains uncertain, with both houses of the National Assembly taking different views. Notwithstanding the amendments made by the National Assembly, the Bills, as currently passed, would introduce several changes to the current tax landscape when signed into law. Key transformative changes expected to shape the future tax landscape are:
1. Increase in the revenue threshold for determining small companies and introduction of a fixed asset threshold as an additional criterion. Medium-sized companies are no longer recognised.
2. VAT paid on all purchases, including services, will now be recovered by businesses through VAT filings, resulting in lower VAT payable. Since VAT incurred on services would no longer be expensed through the income statement, corporate tax payable to the tax authorities is expected to be higher.
3. Introduction of 4% development levy to replace the Tertiary Education Tax and various levies, which would remove the administrative burden of computing the various levies and interfacing with multiple government agencies.
4. Revised rates and bands for personal income tax, with individuals earning less than the minimum wage expected to be exempt from tax. Individuals who earn c. NGN50 million and above are likely to experience progressive increases in their personal income tax.
5. Minimum tax of 0.5% of turnover would no longer apply to a company with no taxable profits. However, a company that earns more than a set revenue threshold (The President proposed a threshold of NGN20 billion) would pay an additional tax if the effective tax rate (ETR) is less than 15%.
6. Constituent entities of multinational enterprises with a set aggregate group turnover (amount remains uncertain until the harmonisation by both chambers of the National Assembly) to pay additional top-up tax if ETR is less than 15%, notwithstanding Nigeria’s position on the OECD/G20 inclusive framework on BEPS. An additional top-up tax would result in the constituent entity paying no more than the 15% calculated ETR. Modalities for implementation are expected to be set out in regulations.
7. Capital gains to be taxed at the same rate as the total profits of a taxable person. Presently, capital gain is taxed at 10%, whilst corporate income tax is set to remain at 30%.
8. Increased deployment of technology to compliance and administration with VAT Fiscalisation, E-invoicing, and National Single Window set to feature prominently in the tax landscape. Digitisation of tax processes is expected to improve visibility of taxpayer transactions to the tax authorities.
9. Introduction of stricter conditions for the grant of tax incentives to businesses that operate in the export processing zone (EPZ) and sell goods and/or services to the customs territory.
10. Overhaul of stamp duties legislation to provide clear guidance on instruments liable to stamp duty and parties obligated to stamp registrable instruments.
11. Expenses and assets for which VAT and import duty have not been charged and/or paid would no longer qualify as allowable expenses or qualifying capital expenditure. This would force businesses to comply with VAT and import duty requirements.
12. Introduction of new penalties and stricter penalty provisions for various infractions, to discourage non-compliance by taxpayers and improve tax collection.
13. Removal of the requirement to retain 1% of qualifying capital expenditure by upstream companies when computing annual allowances.
14. Pioneer status incentive to be replaced by economic development tax incentive, with a more robust administrative and control framework.
15. Introduction of Tax Ombud to mediate between taxpayers and tax authorities, and the reestablishment of the Tax Appeal Tribunal with jurisdiction over all taxes.
There are several other changes that would have varying impacts on individuals and businesses. These changes would impact compliance obligations, technology requirements and ultimately the amount of taxes paid, including cash tax and penalties. It is therefore important that taxpayers evaluate the impact of the passed Bills with a view to preparing for the imminent change in the tax landscape.
Download Nigeria’s new federal tax laws below
(FINAL COPY) NIGERIA REVENUE SERVICE (ESTABLISHMENT) ACT, 2025
(FINAL COPY) NIGERIA TAX ACT, 2025
