Executive Summary
Nigeria’s 2025 Tax Reform Acts overhaul the country’s tax landscape, introducing streamlined legislation with clearer definitions, digital tax administration, consolidated levies, and harmonised compliance. These reforms aim to enhance efficiency, simplify compliance for businesses, and foster economic growth.
1. Nigeria Tax Act (NTA)
The NTA consolidates six legacy tax laws—the Companies Income Tax Act, Petroleum Profits Tax Act, Capital Gains Tax Act, Personal Income Tax Act, Value Added Tax Act, and Stamp Duties Act—into a single statute, eliminating overlapping definitions and conflicting provisions¹.
Small Companies
Small enterprises (turnover ≤ ₦100 million; fixed assets ≤ ₦250 million) are now fully exempt from Companies Income Tax, Capital Gains Tax, and the new Development Levy².
Development Levy
A 4% Development Levy replaces the Tertiary Education Tax, Information Technology Levy, NASENI Levy, and Police Trust Fund contributions, simplifying multiple earmarked levies into one broad-based charge³.
Capital Gains Tax (CGT)
The Capital Gains Tax rate for companies rises from 10% to 30%, aligning it with the corporate income tax rate. Individuals will incur CGT at rates corresponding to their personal income tax bands⁴. The NTA also introduces CGT on indirect share transfers (subject to treaty relief) and raises the exemption threshold for share disposals to ₦150 million in any 12-month period⁵.
To combat profit shifting, entities with an annual turnover of ≥ ₦50 billion or belonging to a multinational enterprise (with a global turnover of ≥ €750 million) must meet a 15% minimum effective tax rate on net income, with “top-up” liabilities where the actual tax falls short.
Surcharge on fossil-fuel products
To align with environmental policy, the Act imposes a 5% surcharge on fossil-fuel products. This aims to encourage low-carbon alternatives. The surcharge is to be remitted to the Nigeria Revenue Service monthly. The Service will publish regulations with more information on how to administer the tax. The surcharge on fossil fuels will not start until the Minister, by Order in the Official Gazette, announces the commencement date.
Stamp Duty
All dutiable instruments (legal documents requiring a tax payment) must be stamped. Corporate loans are subject to ad valorem tax, meaning the tax is calculated as a percentage of the loan’s value. The Act defines loan capital to include debenture stock, other stock, or funded debt by any corporation, company, or body of persons in Nigeria. This excludes overdrafts or loans obtained for periods not exceeding 12 months.
Value Added Tax (VAT)
The standard Value Added Tax (VAT) rate remains at 7.5%, ensuring continuity of indirect tax policy.
Expanded VAT Input Credits for Services and Fixed Assets. Prior to the 2025 reforms, businesses that supplied services were ineligible to claim input VAT (tax paid by a business on its purchases). Under Section 156, companies rendering taxable services may now deduct input VAT on all vatable (subject to VAT) purchases. Additionally, input VAT borne on fixed-asset acquisitions (such as equipment or buildings) becomes recoverable as long as those assets are directly employed in making vatable supplies (goods or services subject to VAT).
Streamlined VAT Refund Procedure
Sections 152–156 set out a clear, automated refund process for VAT (Value Added Tax) overpayments. Eligible businesses can apply for a refund within 12 months from the original transaction date. Once an application is lodged, the business must receive its refund within 30 days. The Nigeria Revenue Service will issue operational guidelines to support the digitised process.
Disallowed Deductions for Non-VATed Expenses
Section 21(p) expressly prohibits the deduction of any expense for which VAT (Value Added Tax) was not levied. In practice, this means that businesses must ensure VAT is charged at every stage of a vatable (taxable) transaction if they wish to claim that cost as a deductible expenditure.
Zero-Rating Extended to Essential Goods and Services
Section 187 expands the list of zero-rated supplies to cover more essential goods and services. This allows suppliers to reclaim the VAT they pay. Newly included items are:
- Basic foodstuffs
- Medicines and pharmaceuticals
- Educational textbooks
- Electricity generation and transmission
- Medical equipment and healthcare services
- Tuition and school fees
- All exports, except crude oil and natural gas
Mandatory VAT Fiscalisation via Electronic Invoicing
Section 158 requires retail operators to use encrypted electronic fiscal devices (EFDs) for every vatable sale. These devices capture sales data that cannot be altered, ensuring transaction integrity and preventing invoice manipulation.
The NTA takes effect on assent, with most provisions enforceable from 1 January 2026.
2. Nigeria Tax Administration Act (NTAA)
The NTAA establishes uniform administrative procedures across all jurisdictions. A single Tax Identification Number (TIN) is mandatory for individuals and entities, streamlining registration and record-keeping⁹.
Rollout of Electronic Fiscal Systems
The Nigeria Revenue Service is empowered to deploy a comprehensive Electronic Fiscal System (EFS). Once EFS is in place, all taxable suppliers must use it for real-time sales recording and reporting. The NRS has piloted a Merchant-Buyer e-Invoicing solution, with nationwide rollout expected in January 2026. Tax filing, payment, and audit must take place on certified digital platforms. These will replace paper returns and physical notices to reduce corruption and administrative delays.
Taxable persons who benefit from specific incentives administered by the Relevant State Tax Authorities (RTAs) must file tax incentive returns. These incentives include those outlined in Section 60 of the Nigeria Tax Act, and recipients are required to submit annual Tax Incentive Returns as well as their standard income tax returns. Tax authorities can now track and monitor the benefits being provided, ensuring that they are being properly utilised¹¹.
Chapter Two of the Nigeria Tax Administration Act (NTAA) sets out the filing obligations for both individuals and corporate entities. Entities involved in petroleum production, mineral extraction, and non-resident shipping or airline operations are required to file monthly tax returns. Specifically, petroleum companies must submit their royalty returns by the 14th day of the month following the month in which the transaction occurred. In contrast, mining operators and non-resident shipping or airline companies have until the 21st of the subsequent month to file their respective returns. Additionally, the Act requires petroleum licence holders to file an annual return detailing all royalty payments made during the accounting year, with the submission due no later than five months after the end of that period.¹².
3. Nigeria Revenue Service Act (NRSA)
Under the NRSA, the Federal Inland Revenue Service (FIRS) has been rebranded and renamed to be the Nigeria Revenue Service (NRS), a unified federal tax agency responsible for administering all federal tax laws. The NRS gains exclusive authority to register taxpayers, issue assessments, collect revenues, and enforce compliance with tax laws. It operates through zonal and regional offices, leveraging centralised databases for real-time data matching and anomaly detection.
The RTAs in each State are required to transmit the tax incentive returns acquired from individual recipients to the NRS within 60 days of the deadline for filing annual tax returns.¹³.
Data-sharing protocols between the NRS and state/local revenue bodies are mandatory, using a common digital portal to eliminate jurisdictional conflicts, align revenue forecasts, and support joint audits¹⁴.
4. Joint Tax Board Act (JTBA)
The JTBA formalises intergovernmental coordination via the Joint Revenue Board (JRB), comprising the NRS chair and state/internal revenue service heads. The JRB’s mandate includes harmonising tax rates, policies, and model regulations across all tiers¹⁵.
It establishes Tax Appeal Tribunals at the federal and state levels for efficient, low-cost dispute resolution, and a standalone Office of the Tax Ombud to investigate taxpayer complaints impartially¹⁶.
Implementation & Next Steps
- Assess your business’s tax position to leverage small-enterprise exemptions and manage CGT and Development Levy implications.
- Review group structures to prepare for the minimum effective tax rate (ETR) regime.
- Upgrade accounting systems to support digital filing, payments, and compliance under the NTAA.
- Tax authorities must prioritise ICT infrastructure upgrades, cybersecurity measures, and capacity-building for staff, while conducting public awareness campaigns on the new procedures.
Achieving successful implementation depends on seamless digital integration by the NRS and robust collaboration through the JRB, fostering a transparent, efficient, and business-friendly tax environment.
Conclusion
The introduction of these Acts is a significant milestone for Nigeria’s tax landscape. Businesses must proactively re-evaluate tax strategies, operational procedures, and compliance frameworks to remain agile and fully compliant in this new regulatory environment.
This article is intended for informational purposes only. It does not constitute legal advice and should not be relied upon for that purpose. We recommend consulting a qualified legal professional for advice specific to your circumstances.
For further information or assistance with tax compliance and advisory services, please contact the Lex Luminar team at support@lexluminar.com
FOOTNOTES
- Sections 1–5, Nigeria Tax Act 2025.
- Section 56(a), Nigerian Tax Act 2025.
- Section 59, Nigerian Tax Act 2025.
- Section 33, Nigeria Tax Act, 2025.
- Section 34, Nigeria Tax Act, 2025.
- Section 6(3)). Section 57 of the Nigeria Tax Act, 2025
- The Nigerian 2025 Tax Reform Acts: Legal Review, 1st Attorneys (28 June 2025).
- Section 136, Nigeria Tax Act, 2025.
- Nigeria Tax Administration Act, 2025 Explanatory Memorandum;
- Section 23 of the Nigeria Tax Administration Act (NTAA)
- Section 27 of the Nigeria Tax Administration Act (NTAA)
- Sections 8, 20, 21 of the Nigeria Tax Administration Act (NTAA) 13. Section 27(2) Nigeria Revenue Service (Establishment) Act, 2025.
- A New Fiscal Framework, NESG (3 July 2025).
- Section 23, Joint Revenue Board Of Nigeria (Establishment) Act, 2025.
- Section 37-46 Joint Revenue Board Of Nigeria (Establishment) Act, 2025