Nigeria’s new tax law, set to take effect on January 1, 2026, marks one of the most significant overhauls of the country’s fiscal landscape in decades. Combined into the Nigeria Tax Act 2025 and related legislation, the reforms repeal and consolidate major statutes into a unified regime designed to simplify compliance, broaden the tax base, and boost revenue for development. The changes affect businesses of all sizes, from micro enterprises to multinational corporations, and introduce modern tax principles such as minimum effective tax rates, digital filing requirements, and enhanced administration through the new Nigeria Revenue Service (NRS).
“Companies with an annual turnover up to ₦100 million and total fixed assets not exceeding ₦250 million are fully exempt from Companies Income Tax, Capital Gains Tax, and the Development Levy.”
For many small and medium-sized enterprises (SMEs), this exemption offers a welcome reprieve from tax burdens that have long hindered formal sector growth. However, larger businesses must prepare for sweeping changes to corporate tax structures. The corporate tax rate for medium and large companies drops from 30 % to 25 %, while a 4 % Development Levy on assessable profits replaces several older levies to streamline compliance. At the same time, the minimum effective tax rate of 15 % for multinationals and high-turnover groups aims to curb profit shifting and align Nigeria with global tax norms.
Operationally, the reforms insist on digital transformation and tighter compliance. All businesses must adopt e-invoicing and real-time systems for VAT and other filings, and non-compliance now attracts stiffer penalties. Additionally, the shift to a Unified Taxpayer Identification Number (UTIN) and expanded withholding tax regimes mean your finance teams will need to revisit internal controls, reporting cycles, and ERP setups well before 2026.
Wrapping Up
For businesses in Nigeria, the new tax law is both a challenge and an opportunity. While compliance demands and reporting standards rise, so too do incentives for investment and growth, particularly for those leveraging exemptions and credits effectively. Planning, engaging tax professionals, and investing in digital systems now will be key to navigating this new fiscal era with confidence.
