PWC lists top 20 changes in Nigerian tax reform acts 

The new tax laws signed by President Bola Tinubu on June 26, 2025, constitute a bold policy initiative designed to change the business landscape in Nigeria. 

The new laws are: the Nigeria Tax  Act to guide the fiscal  framework for taxation in the country comprise  dozens of tax laws; the Tax Administration Act,  which provides a clear and concise legal framework  for all taxes by federating units in the country  (federal, state, and local governments); the Nigeria  Revenue Service (Establishment) Act, which repeals  the Federal Inland Revenue Service (FIRS) Act and  establishes the Nigeria Revenue Service (NRS), and  the Joint Revenue Board Establishment Act, which  is expected to improve co-ordination between all  levels of government in the country,  aside creating offices for both a tax  tribunal and tax ombudsman.

The Acts comprehensively overhaul the Nigerian tax system to drive economic  growth, increase revenue generation, improve the business environment and  enhance effective tax administration across the different levels of government.

 The objectives of the new  laws include enhancing revenue  collection  efficiency,  ensuring  transparent reporting, promoting  the effective utilisation of tax to  boost citizens’ tax morale, and  fostering a healthy tax culture by  driving voluntary compliance. 

PWC lists top 20 changes in the new Nigeria tax reform signed by Tinubu on June 26, 2025. 

1. Increased exemption threshold for small companies – Small companies are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT) and the  newly introduced Development levy (see below). Small companies are defined as  companies with annual gross turnovers of NGN100million (previously  NGN25million) and below and total fixed assets not exceeding NGN250million. 
2. Increased Capital Gains Tax (CGT) rate – The NTA increases the Capital Gains  Tax rate from 10% to 30% for companies. This effectively aligns the CGT and  Companies Income Tax rate and reduces any tax arbitrage that could have been  unduly enjoyed in the classification between chargeable gains and trading income.  For individuals, capital gains will be taxed at the applicable income tax rate based on  the progressive tax band of the individual.
3. CGT on Indirect transfer of shares – The NTA introduces CGT on indirect  transfers of shares in Nigerian companies so that where shares are disposed of in  intermediary holding companies offshore, a Nigeria CGT is triggered (subject to  treaty exemptions). Also, the tax exemption threshold for the sale of shares in  Nigerian companies has been increased to NGN150million (from NGN 100 million)  in any 12 consecutive months, provided that the gains do not exceed NGN10million. 
4. Introduction of Development Levy – Nigerian companies except small  companies will pay a “Development Levy” at 4% of their assessable profits (i,e. tax  profits before deducting tax depreciation and losses). The Development Levy  consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT),  the National Agency for Science and Engineering Infrastructure (NASENI) levy and  the Police Trust Fund (PTF) levy. 
5. Minimum Effective Tax Rate (ETR) – Nigerian companies who are members of a  multinational group with aggregate group turnover of EUR750million and above or  have an annual turnover of NGN50billion and above, will now be subject to a  minimum effective tax rate (ETR) of 15% of their “Net Income”. Net Income is  defined as profits before tax excluding franked investment income and unrealised  gains or losses, except for life insurance companies where the definition of Net  Income also excludes gross and investment income for policyholders. The minimum  effective tax rule does not apply to Free Zone companies on their exports out of  Nigeria, provided that such companies are not part of multinational groups.  The Nigerian Tax Reform ActsThe Nigerian parent company of a multinational group will have to pay a top up tax  where its subsidiaries have paid taxes below the minimum 15% ETR. 
6.  Controlled Foreign Company rules – The NTA imposes a tax on undistributed  profits of foreign companies controlled by Nigerian companies, where it is considered  that the foreign subsidiary could have distributed dividends without harming its  business. 
7. Taxable profits of non-residents – The NTA expands the scope of the activities  of non-resident companies that are subject to tax in Nigeria. Notably, the NTA  introduces “force of attraction” rules. Under these rules, certain activities carried out  by a non-resident company or its related parties, can be taxed as part of the non resident company’s permanent establishment (PE) in Nigeria, even if those activities  are not physically conducted through the PE. In addition, profits from Engineering,  Procurement, and Construction contracts can be taxed in Nigeria, even if some of the  activities are performed under separate contracts or outside Nigeria. 
8. Minimum Tax for Non-resident companies – Non-resident companies who  have a taxable presence in Nigeria will now be subject to minimum tax based on the  percentage of their earnings before interest and tax (EBIT) to the total income  generated from Nigeria. In any case, tax payable by such companies cannot be less  than the withholding tax (WHT) rate applicable to the income, or 4% of the income.
9. Restriction on the tax exemption status of free zone entities – Based on  the publicly available version of the bills submitted for presidential assent, Free Zone  companies will continue to enjoy full tax exemption on their exports, or output that  go into goods or services eventually exported, or supplied to oil and gas companies.  Proportionate taxes apply where more than 25% of the Free Zone company’s sales are  made to the customs territory. From 1 January 2028, the full profits of Free Zone  entities will be subject to tax if they make any sales to the customs territory.
10. Introduction of Economic Development Incentive – The Acts replace the “pioneer” tax holiday incentive, with an “Economic Development Incentive” (or EDI).  This incentive introduces 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. If a company has unused tax credits or qualifying capital expenses, it  can carry them forward for another 5 years. Any credits still unused after this  timeline will expire.
11. A more progressive Personal Income Tax (PIT) regime – The NTA changes  the income brackets and applicable tax rates for each bracket. Individuals earning  NGN800,000 or less per annum will now be exempt from tax on their income and  gains, while higher income earners will be taxed at a higher rate up to 25%. The Act  also increases the tax exemption threshold for compensation for loss of employment  or injury from NGN10million to NGN50million
12. Resident and Non-Resident Individuals defined – PIT will apply to the  worldwide income of a resident individual which is now clearly defined in the new  Act. Prior to now there had been varied interpretations due to a lack of proper  definition of “residence”. With the definition extending to individuals with  substantial economic and immediate family ties in a year of assessment, the law  widens the tax net. Employment  income will now be taxed in Nigeria only if the  individual is resident in Nigeria or performs duties in Nigeria without paying tax in  their country of residence. The Nigerian Tax Reform Acts
13. Introduction of the Tax Ombuds office – The Acts introduce the Tax Ombuds  office to liaise with the tax authorities on behalf of taxpayers, and serve as an independent arbiter to review and resolve complaints relating to taxes, levies,  duties or similar regulatory charges. 
14. Input VAT Recovery – The VAT rate of 7.5% has been retained. Nigeria now  adopts globally recognised VAT principles that allow for the claim of input VAT on  all purchases including services and fixed assets. Businesses can now recover input  VAT provided that the input VAT is directly related to their supplies that are also  subject to VAT.
15. VAT at zero rate on essential goods and services – The NTA expands the list  of zero-rated items to include essential goods and services such as basic food items,  medical and pharmaceutical products, educational books and materials, electricity  generation and transmission services, medical equipment and services, tuition fees,  exports (excluding oil and gas exports) etc. The impact of this is that businesses  selling these goods and services can recover their VAT costs, despite the zero rate  which was previously not possible by law.
16. VAT fiscalisation rules – Nigeria has now codified VAT fiscalisation rules and  mandatory e-invoicing for businesses operating in the country. This sets Nigeria  apart as an early adopter of e-invoicing in Africa. Companies in Nigeria are now  mandated to implement the fiscalisation system deployed by the tax authority for  the collection of VAT. 
17. Update to the VAT sharing formula The Acts reduce the Federal  Government’s share of VAT from 15% to 10%, while increasing the allocations of  states and Local Government Areas to 55% and 35%, respectively. The VAT  revenue assigned to states and local governments is further allocated as follows:  50% divided equally, 20% based on population, and 30% based on place of  consumption.
18. Increased penalties for non-compliance – There has been a significant  increase in non-compliance penalties and the introduction of new penalties. Some  of the updates include increase in the penalty for failure to file returns to  NGN100,000 in the first month, and NGN50,000 for every month the failure  continues, introduction of new penalties such as penalty of NGN5million for  awarding contracts to individuals or entities that are not registered for tax,  penalties for failure to grant access for deployment of technology, inducing a tax  officer etc.
19. Disclosure of tax planning arrangements – The NTAA requires companies to  voluntarily and proactively notify the tax authorities of tax planning transactions  or  schemes which can provide a tax advantage. The term “tax advantage” refers  broadly to any situation where a person or entity benefits from a favorable tax  outcome. This includes obtaining new or increased tax reliefs, receiving or  increasing tax repayments, reducing or avoiding tax charges or assessments,  deferring tax payments or accelerating tax repayments, and avoiding obligations to  deduct or account for tax. Essentially, it covers any arrangement or action that  results in a more beneficial tax position than would otherwise occur.
20. FIRS renamed the Nigeria Revenue Service and SIRS become  autonomous – The Federal Inland Revenue Service (FIRS) has now been renamed  the Nigeria Revenue Service (NRS) to reflect its responsibilities as the body to assess,  collect and account for revenue due to federation. The Acts also provide that State  Internal Revenue Services will be autonomous in the running of their affairs. The Law  also provides the framework for joint audits and for NRS to, upon request, support State and Local governments to collect and administer taxes.