Nigeria Tax Act 2025: What Every Business Owner Needs to Know

Leave a Comment / Tax Acts 2026 / Paul Adeosun

On June 26, 2025, President Bola Ahmed Tinubu signed the Nigeria Tax Act (NTA) 2025 into law—a landmark moment that signals the most ambitious tax reform Nigeria has seen in decades. While the effective date is January 1, 2026, the countdown to transformation has already begun. Whether you’re a business owner, HR manager, or CFO, this unified tax framework will reshape how you operate, file taxes, and plan for growth. But here’s the thing: this isn’t something to fear. It’s actually a streamlined, modernized system designed to simplify compliance and create a fairer tax environment. Let’s break down what’s changing and why it matters for you. The Framework: Nigeria’s Unified Tax System Imagine managing tax compliance across twelve different tax laws—conflicting provisions, overlapping regulations, confusing interpretations. That was the old Nigeria. The NTA 2025 consolidates these into one unified legislation, repealing outdated acts including the Personal Income Tax Act, Companies Income Tax Act, Value Added Tax Act, and Capital Gains Tax Act. The goal? Reduce administrative burden, eliminate nuisance taxes, and create transparency. For businesses, this means fewer headaches and clearer rules on the road ahead. The Seven Highlights You Should Know 1. Personal Income Tax: ₦800k Relief + Progressive Rates The NTA introduces the first major personal income tax reform since 2012—and it’s surprisingly balanced: Tax-free zone: Individuals earning ₦800,000 or less annually are exempt from personal income tax entirely. This provides much-needed relief for entry and junior-level professionals. Progressive tax rates: High earners face progressive rates up to 25% on the highest band. Expanded relief: Compensation for loss of office is now exempt up to ₦50 million (increased from ₦10 million), offering better protection for executives during transitions. New residency definitions: The Act clearly defines tax residents—those domiciled in Nigeria, with permanent residences, substantial economic ties, or who spend 183+ days in Nigeria. This eliminates ambiguity for companies managing international assignees. 2.Global Minimum Tax: Large Companies Pay Their Fair Share For companies, the NTA introduces three game-changing provisions: Global Minimum Tax: Companies with ₦50 billion+ annual turnover or multinational enterprises earning over €750 million globally must pay a minimum effective tax rate (ETR) of 15%. If your actual tax falls short, a top-up tax applies. This prevents profit-shifting and ensures large corporations pay their fair share. Development Levy: A unified 4% levy on assessable profits replaces multiple overlapping sector taxes (Tertiary Education Tax, IT Levy, NASENI Levy, Police Trust Fund). This reduction in nuisance taxes streamlines operations—fewer payments to track, one clear obligation. Controlled Foreign Company Rules: Nigerian parent companies can no longer indefinitely defer taxes by keeping profits in foreign subsidiaries. The NTA requires taxation of undistributed profits from controlled foreign entities, promoting transparency and compliance. 3. Value Added Tax (VAT): More Exemptions, Same Rate The VAT rate remains at 7.5%, but the Act expands zero-rated items to include: Essential foods and basic commodities Educational materials and services Electricity and water services Medical goods and healthcare services Exports (excluding oil and gas) For businesses, mandatory e-invoicing and digitalized VAT systems become non-negotiable. This isn’t just paperwork—it’s about real-time compliance and reduced audit risks. 4. Capital Gains Tax: Closing Loopholes The Act introduces an innovative anti-avoidance provision: gains from disposing of shares in non-Nigerian entities that derive substantial value from Nigerian assets are now subject to Nigerian CGT. This closes the offshore holding structure loophole and signals the government’s intent to broaden the tax base fairly. 5. Non-Residents & Foreign Investors: New Rules, New Clarity Non-residents now pay tax on Nigeria-sourced income, including digital services. Key changes: Previous broad exemptions for non-resident employees have been significantly narrowed. Digital and virtual asset gains are now taxable (reflecting our modern economy). Double Tax Agreements (DTAs) take precedence in disputes—providing investors with clarity and treaty protection. 6. Digital Assets & Virtual Services: Welcome to the Modern Economy The NTA recognizes the reality of today’s business landscape by introducing: Taxation of digital/virtual asset gains and prizes Mandatory registration for Virtual Asset Service Providers (VASPs) Tax obligations for content creators, influencers, and digital traders This modernization creates certainty for businesses operating in the digital space—no more gray areas. 7. FIRS Becomes the Nigeria Revenue Service (NRS) The Federal Inland Revenue Service (FIRS) transitions to the Nigeria Revenue Service (NRS), a more autonomous, digitally-enabled body with expanded mandate. The NRS now collects both tax and non-tax revenues, with: Advanced Rulings: Get pre-approval on specific transactions or structures, reducing disputes and uncertainty. Enhanced Enforcement Powers: Better data access and coordination across government agencies. Tax Ombudsman: An independent office to resolve taxpayer grievances outside the formal appeal system. Joint Revenue Board (JRB): A harmonizing body coordinating federal, state, and local tax administration. This is about fairness and consistency—taxpayers finally have a clearer voice and recourse. What You Need to Do Right Now Before January 1, 2026: Audit your current tax structure and payroll systems Update systems for new tax bands and e-invoicing requirements Ensure your business is digitally ready for NRS compliance Get clarity on which rules apply to your specific operations The Critical Requirement: Proper Financial Records Under the NTA 2025, maintaining comprehensive and accurate financial records is no longer optional—it’s mandatory. The NRS expects businesses to track every transaction, maintain digital audit trails, and provide real-time compliance data. Missing or poorly organized records can result in penalties, disputes, and unnecessary tax audits. This is where most businesses struggle. Manual spreadsheets and fragmented systems create gaps, inconsistencies, and compliance risks. At Excellium, our Finance & ERP solutions are built to solve this exact problem. Our software automates expense tracking, maintains real-time financial records, ensures e-invoicing compliance, and gives you complete visibility into your tax obligations across all operations. You’ll never scramble during tax season again. Critical Next Step: If you’re unsure which financial records to gather and maintain for the new tax season, check out our detailed guide: https://excellium.biz/firs-2026-tax-season-5-critical-financial-records-that-could-save-your-business-%e2%82%a6millions/ It walks you through exactly what documents you’ll need to avoid costly compliance gaps. Why This Matters for Your Bottom Line: The NTA 2025 is

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FIRS 2026 Tax Season: 5 Critical Financial Records That Could Save Your Business ₦Millions

January 1, 2026 is coming fast, and if you’re running a Nigerian business, the new tax law is about to shake things up big time. The FIRS is transforming into the Nigeria Revenue Service (NRS), and they’re not playing around anymore. They’ve got expanded powers, digital tracking systems, and stricter compliance requirements that mean they can now connect the dots between your business bank accounts, corporate registrations, and other government databases. Here’s what’s real: businesses with solid financial records are going to breeze through 2026. Businesses without them? They’re looking at penalties, missed deductions, and audit headaches that’ll give you sleepless nights. So let’s cut through the noise and talk about what you actually need to have in place right now. What’s Actually Happening in 2026? Look, the new tax reform is consolidating a bunch of different tax laws into one big unified system. It’s introducing stricter penalties for people who mess up, and the NRS is getting powers to cross-check your business data directly with your bank and other government agencies. Honestly, if you’re organized, this is good news. If you’re not, well… that’s a problem. The changes that directly affect your wallet are pretty straightforward. If your company’s annual turnover hits ₦100 million or higher, you’re paying Company Income Tax. If you’re an individual earning less than ₦800,000 a year, congratulations—you don’t pay personal income tax (but you still need to file returns and keep records). If you’re making money from abroad as a remote worker or freelancer, you’re now looking at up to 23% tax on foreign earnings. And here’s something a lot of people miss: you can claim 20% of your rent as a deductible expense, capped at ₦500,000 per year. The bottom line? Your financial records need to be on point. Record 1: Sales & Revenue Documentation Every single naira that comes into your business needs proof. We’re talking invoices, receipts, bank deposits, payment confirmations from Payoneer, Wise, PayPal—literally everything. Why does this matter so much right now? Because the company income tax rate is now sitting between 10-30%, which means your accurate income documentation literally determines what your exact tax bill is going to be. And if you’re one of those people earning money from abroad through online platforms or as a remote worker, the new rules are demanding way more transparency. Those days of payments quietly coming through payment platforms without anyone knowing about them? Yeah, those are over. The smartest move you can make is to start using accounting software that automatically tracks all your sales. Take digital copies of every payment receipt you get and organize them by month. That’s what the FIRS is expecting to see when they come knocking. Record 2: Business Expenses & Deductions This is honestly where you can reduce what you actually owe the government. Every legitimate business expense—your office rent, utilities, equipment, staff meals during business meetings, office supplies, professional services like accounting or legal help, advertising and marketing spend—all of it counts as long as you’ve got receipts to back it up. But here’s something that just changed and most people don’t know about yet: you can now claim 20% of whatever you pay as rent as a deductible expense, but here’s the catch—it’s capped at ₦500,000 per year. That’s basically free money if you just document it properly. On top of that, if you’re exporting goods from Nigeria, any profits you make from those exports are completely exempt from income tax—as long as the money comes back into Nigeria through official legal channels. That’s huge if you’re in the export business. What you need to do is photograph every receipt the moment you get it. Create folders or categories for different types of expenses—rent, utilities, supplies, marketing—and keep them organized. The FIRS requires you to hold onto these for at least six years, so make sure your storage system can handle that. Record 3: Payroll & Employment Records If you’ve got people working for you, listen up—this is non-negotiable stuff. The FIRS watches payroll like a hawk because it connects to multiple types of taxes. They’re checking employee names, their TINs, gross salaries paid, every deduction (whether it’s tax, pension contributions, or health insurance), net pay, and exactly when payments were made—all of this for every single pay period. The real talk is that doing payroll manually or with spreadsheets is asking for trouble. Use professional payroll software or hire a payroll service. Yeah, there’s a cost, but it’s way cheaper than paying FIRS penalties for getting it wrong. And you’ve got to keep these records for a minimum of six years. Record 4: Bank Statements & Reconciliation Your bank statements are basically your audit trail. Every deposit that goes in should match up with your income records. Every withdrawal should line up with your expenses. When there are gaps or things don’t match, that’s when the FIRS gets interested and starts asking questions. What most businesses don’t do but absolutely should is reconcile their bank accounts every single month. Don’t wait until tax season is breathing down your neck. Monthly reconciliation catches mistakes early, stops fraud before it happens, and gives you a real picture of whether your business is actually making money or bleeding cash. The best way to do this is using accounting software that automatically pulls in your transactions from your bank. It saves you hours and cuts down on errors. Keep your bank statements for at least six years—honestly, you should probably keep them forever since they don’t take up much space digitally. Record 5: Fixed Assets & Depreciation Records This is the one a lot of Nigerian business owners completely overlook, but it matters. If your business owns equipment, vehicles, computers, machinery, or if you’ve renovated or improved property, you need to document all of it. For each asset, you should know the purchase date, how much you paid for it, what the business purpose is, and how you’re depreciating it for tax purposes. Why should

Tax Acts 2026

Nigeria Tax Act 2025: What Every Business Owner Needs to Know

FIRS 2026 Tax Season: 5 Critical Financial Records That Could Save Your Business ₦Millions

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