Nigeria Tax Regime

Nigeria has just completed the most significant overhaul of its tax system in decades. Four reform statutes signed in June 2025 — the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act — took effect from 1 January 2026, consolidating the former Companies Income Tax, Personal Income Tax, Capital Gains Tax, Petroleum Profits Tax and a patchwork of earmarked levies into a single codified framework. Resident companies are taxed on worldwide income at a headline 30% rate (0% for small companies), supplemented by a 4% development levy and, for the largest groups, a 15% domestic minimum effective tax rate aligned with the global minimum tax. Administration has moved from the Federal Inland Revenue Service to the new Nigeria Revenue Service, with states retaining personal income tax collection for individuals.

1.1 Sources

Primary legislation includes the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025, the Joint Revenue Board (Establishment) Act 2025, the Petroleum Industry Act 2021 and subsidiary instruments including the Income Tax (Transfer Pricing) Regulations and the Deduction of Tax at Source (Withholding) Regulations 2024.

1.2 Recent developments

The 2025 reform acts, effective 1 January 2026, are the defining development. Headline changes include: retention of the 30% corporate rate with a statutory pathway for reduction to 25% by presidential order on the advice of the National Economic Council; harmonisation of capital gains with corporate income tax at 30% (previously 10%); replacement of the tertiary education tax, information technology levy, NASENI levy and police trust fund levy with a single 4% development levy on assessable profits; a 15% minimum effective tax rate for companies with turnover of NGN 50 billion or more and for members of multinational groups with consolidated revenue of at least EUR 750 million; new controlled foreign company and top-up tax rules; a redesigned personal income tax schedule with a 0% band on the first NGN 800,000 and a 25% top rate; and expanded zero-rating under VAT for basic food, medical and educational items. The Federal Inland Revenue Service was re-established as the Nigeria Revenue Service.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Companies incorporated in Nigeria are resident and taxed on worldwide income; non-resident companies are taxed on Nigeria-source income, including profits attributable to a permanent establishment or, for digital businesses, a significant economic presence (SEP). The corporate income tax rate is 30% for companies other than small companies, assessed on a preceding-year basis (profits of the accounting year ending in the year preceding assessment). Small companies — annual gross turnover not exceeding NGN 100 million and total fixed assets not exceeding NGN 250 million — pay 0%. The statute provides for a subsequent reduction of the 30% rate to 25% from a date to be specified by presidential order. A 4% development levy applies to the assessable profits of all Nigerian companies except small companies and non-resident companies.

A non-resident digital company creates a taxable SEP where it derives NGN 25 million or more from Nigeria in a year (streaming and downloads, data transmission, goods and services supplied through digital platforms, and intermediation), uses a Nigerian domain name, or purposefully targets Nigerian customers (for example naira pricing). Where attributable profits of a PE or SEP cannot be determined, profits are deemed by reference to the entity's global profit margin, and the tax payable must be at least the withholding tax deducted at source or, where none applies, 4% of total Nigerian income. Upstream petroleum operations are taxed under the Petroleum Industry Act framework: converted licence holders pay CIT at 30% plus hydrocarbon tax at 30% (converted onshore/shallow-water leases) or 15% (onshore prospecting licences and marginal fields), while legacy licences remain under the petroleum profits tax at 50% to 85%.

2.2 Dividends and participation relief

Nigeria has no general participation exemption; instead it relies on the franked investment income mechanism. Dividends received by a Nigerian company from another Nigerian company suffer 10% withholding at source, which is a final tax — the dividend is not taxed again in the recipient's hands and can be redistributed without further withholding. Dividends, interest, rent and royalties earned abroad and brought into Nigeria through approved government channels are exempt from tax. Distributions by a company in excess of its taxable profit can trigger the alternative tax on distributions, though dividends that have already borne tax, exempt profits and previously taxed retained earnings are carved out. Undistributed profits of a closely held company controlled by five or fewer individuals may be deemed distributed and subjected to 10% withholding.

2.3 Income determination and deductions

Taxable profits start from financial statements prepared under IFRS, adjusted for tax. Expenses are deductible where wholly and exclusively incurred in generating taxable profits. Depreciation is replaced for tax purposes by capital allowances at prescribed rates on qualifying plant, machinery, buildings and other assets; unutilised allowances carry forward. Chargeable (capital) gains are now taxed as part of total profits at the standard 30% rate, harmonised with income tax by the Nigeria Tax Act, and indirect transfers of Nigerian companies or Nigerian-situated assets are within scope subject to treaty relief. Non-deductible items include expenses attributable to exempt income, unapproved pension contributions and penalties. Input VAT on services and capital assets became creditable under the reform, removing a former cost that was embedded in deductible expenses.

2.4 Interest limitation

Deductible interest on loans from foreign connected persons is capped at 30% of EBITDA, in line with the OECD BEPS Action 4 corridor. Interest disallowed under the cap may be carried forward for up to five years. Interest on loans between Nigerian related parties and third-party financing is outside the ring-fence but remains subject to the arm's-length and wholly-and-exclusively tests. Thin-capitalisation outcomes are otherwise managed through transfer pricing rather than a fixed debt-equity ratio.

2.5 Losses

Trading losses may be carried forward indefinitely and set against future profits of the same trade. There is no loss carryback. The former four-year limit for insurance companies has been removed. Losses cannot be transferred between group companies, and capital allowances claims can be tailored (deferred) to preserve loss utilisation. Loss continuity should be reviewed on major ownership or business changes, particularly in reorganisations seeking tax-neutral treatment.

2.6 Group taxation

Nigeria has no fiscal unity or consolidated filing: each company is assessed separately, and losses cannot be surrendered between members of a group. Relief is instead available for group reorganisations — transfers of assets between related parties in a scheme of restructuring can be effected on a tax-neutral (no gain, no loss) basis where the entities have been related for at least 365 days before the transfer, with clawback where the acquirer disposes of the assets within a further 365 days. Value added tax and stamp duty reliefs mirror the reorganisation relief for qualifying intra-group transfers.

2.7 Controlled foreign companies

The Nigeria Tax Act introduced CFC rules for the first time: the tax authority may deem a portion of the undistributed profits of a foreign subsidiary of a Nigerian parent to be distributed as a dividend and assess the Nigerian company to income tax at a rate of up to 34% on the deemed distribution. In parallel, a Nigerian parent must pay a top-up tax where the effective tax rate of a non-resident subsidiary falls below 15%, an outbound complement to the domestic minimum effective tax rate. Both rules significantly raise the stakes for Nigerian-headquartered groups holding profits offshore in low-tax jurisdictions.

2.8 Transfer pricing

Nigeria applies the arm's-length principle under the Income Tax (Transfer Pricing) Regulations, which follow the OECD Transfer Pricing Guidelines and the UN Practical Manual. Taxpayers must file annual TP declarations and disclosures with their returns; contemporaneous master-file and local-file documentation is mandatory above a NGN 300 million related-party transaction threshold, and country-by-country reporting applies to groups with consolidated revenue of NGN 160 billion (or EUR 750 million for foreign-parented groups). Administrative penalties for late or missing TP filings are severe and computed per form and per period. Safe harbours are limited, and audits focus on management fees, intra-group services, procurement structures and commodity pricing.

2.9 Incentives

The reform replaced the pioneer-status tax holiday with the economic development incentive: a 5% annual tax credit for five years on qualifying capital expenditure in priority sectors, creditable against CIT with carryforward for unused credits. Free zone enterprises retain exemption for qualifying export-oriented activities, with profits from sales into the customs territory now taxable. Other measures include enhanced deductions for agricultural businesses, exemption of Real Estate Investment Company rental and dividend income where at least 75% is distributed within 12 months, and gas utilisation incentives. Small companies enjoy the 0% rate, exemption from the development levy and simplified compliance.

2.10 Minimum effective tax rate and Pillar Two

Rather than a conventional QDMTT statute, Nigeria legislated a domestic minimum effective tax rate of 15% of net income for Nigerian companies with turnover of NGN 50 billion or more and for constituent entities of multinational groups with aggregate turnover of at least EUR 750 million. Net income is profit before tax per the audited financial statements, excluding franked investment income and unrealised exchange differences; covered taxes include income tax, petroleum profit tax, hydrocarbon tax, the development levy and the priority sector tax credit. Where the effective rate falls below 15%, the company must recompute and pay additional tax to reach 15%. Combined with the outbound top-up tax on low-taxed foreign subsidiaries (section 2.7), the design tracks the logic of the global minimum tax while remaining a domestic charge.

2.11 Branch income and reorganisations

Foreign companies generally cannot carry on business in Nigeria through an unincorporated branch outside the free zones — a local subsidiary must usually be incorporated — but a non-resident with a Nigerian PE or SEP is taxed at 30% on attributable profits, with the deemed-profit fallback and the 4%-of-turnover floor described in section 2.1. There is no separate branch profits remittance tax. Domestic reorganisations benefit from the 365-day related-party relief in section 2.6; cross-border mergers and indirect transfers of Nigerian interests require tax authority engagement, and treaty exemptions for indirect transfers are conditioned on approval.

3.1 Residence and rates

Individuals resident in Nigeria are taxed on worldwide income; non-residents are taxed on Nigeria-source income, including employment income for duties performed in Nigeria unless treaty-protected. Residence turns on domicile, a place of habitual abode or presence of 183 days or more in a 12-month period. From 1 January 2026 the annual progressive schedule is: first NGN 800,000 at 0%; next NGN 2,200,000 at 15%; next NGN 9,000,000 at 18%; next NGN 13,000,000 at 21%; next NGN 25,000,000 at 23%; and the balance above NGN 50,000,000 at 25%. The former consolidated relief allowance was abolished and replaced by targeted reliefs, notably a rent relief of 20% of annual rent capped at NGN 500,000. Personal income tax is collected by the state of residence; the Federal Capital Territory and certain categories (military, foreign affairs) are assessed federally.

3.2 Capital income and gains

Dividends, interest and rent paid to resident individuals suffer withholding at source at 10% (dividends and interest) which, for dividends, is a final tax. Interest on federal government securities enjoys targeted exemptions. Under the reformed code, chargeable gains of individuals — including gains on shares and digital or virtual assets — are taxed at the individual's marginal progressive rates rather than the former flat 10%, with an annual exemption for modest share disposals and rollover relief for reinvested proceeds in qualifying cases. Gains on an individual's principal private residence and personal chattels within limits remain exempt.

3.3 Social contributions and payroll

Employers operate Pay-As-You-Earn withholding monthly, remitting by the 10th of the following month to the relevant state authority. Statutory deductions alongside PAYE include employee pension contributions of 8% of monthly emoluments (employer 10%) under the Pension Reform Act, National Housing Fund contributions of 2.5% of basic salary for eligible employees, and employer-side obligations comprising the 1% Industrial Training Fund levy, 1% employee compensation scheme contribution and group life insurance cover of at least three times annual emoluments. Pension and NHF contributions are deductible in computing taxable income.

3.4 Inbound individuals

There is no net wealth tax and no inheritance or gift tax in Nigeria; estate administration is governed by state law without a death duty. Expatriates working in Nigeria are taxable from day one where the employer is Nigerian or the remuneration is borne by a Nigerian PE, subject to the 183-day treaty exemption for short-stay employees of non-resident employers. Expatriates require work permits under the expatriate quota system, and the annual immigration returns interact with tax residence monitoring. Foreign tax credits are available under treaties; unilateral Commonwealth relief persists in limited form.

Withholding tax operates both as an advance collection mechanism on domestic payments and as a final tax on Nigerian-source investment income of non-residents. The Deduction of Tax at Source (Withholding) Regulations 2024 modernised the framework: rates were rationalised, small suppliers were carved out, and compliant sectors received reduced rates. Dividends, interest and royalties paid to non-resident companies bear 10%, generally final; most of Nigeria's treaties reduce these to 7.5%. Fees for technical, management and professional services paid to non-residents attract 10%, subject to treaty business-profits protection where no PE exists. Nigeria's treaty network is compact — roughly 16 conventions in force, including the United Kingdom, the Netherlands, Belgium, Canada, China, France, South Africa and Singapore — so structuring options are narrower than in larger networks and substance requirements apply.

Withholding deducted from payments to residents is a creditable advance against the recipient's assessed liability, except where designated final (for example dividends). Remittance is due within 21 days of deduction (by the 10th of the following month for PAYE-linked state collections), with receipts and credit notes processed electronically. Treaty relief is generally applied at source on the basis of residence certification; the deemed-profit and minimum-tax rules of section 2.1 mean withholding often represents the floor of Nigerian tax for non-resident service providers.

5.1 General anti-avoidance and related-party rules

The Nigeria Tax Act retains a general anti-avoidance rule permitting the Service to disregard or recharacterise artificial or fictitious transactions, including transactions between related parties not at arm's length. This operates alongside the transfer pricing regulations, the 30% EBITDA interest ring-fence for foreign connected-party debt, the new CFC and top-up tax rules, and the excess dividend tax, which together form a layered anti-base-erosion architecture. Nigeria participates in the OECD Inclusive Framework and applies BEPS minimum standards on treaty abuse and country-by-country reporting; the principal-purpose test features in newer treaties.

5.2 Exit, indirect transfers and disclosure

Indirect transfers of ownership in a Nigerian company, or of interests in Nigerian-situated assets, are taxable where the sale changes the ownership structure of the Nigerian company, subject to treaty exemptions that require prior tax authority approval. Nigeria exchanges information under the multilateral convention and has adopted common reporting standard exchanges of financial account information; beneficial ownership disclosure applies through the Corporate Affairs Commission's persons-with-significant-control register. Documentation and approvals for capital importation (certificates of capital importation) remain the gateway to repatriating dividends, interest and sale proceeds through the official market, making exchange-control paperwork a de facto part of tax planning.

6.1 VAT

VAT is levied at a single standard rate of 7.5%. The 2025 reform kept the rate but widened zero-rating to basic food items, medical and pharmaceutical products, educational books and materials, electricity generation feedstock and exports, while retaining exemptions for other essentials — a deliberate shift of relief toward consumers. Registration is required for taxable persons; small suppliers below NGN 100 million turnover (aligned with the small-company threshold) are relieved of charging obligations. Input VAT is now creditable on services and capital assets, not only on goods purchased for resale or production, and refunds of excess credits are provided for. Returns and payment are due by the 21st day of the month following the transaction month. Non-resident suppliers of digital and other services to Nigerian customers must register and charge VAT under the significant-economic-presence framework, or the Nigerian customer self-accounts by reverse charge; e-invoicing through the fiscalisation system is being phased in for large taxpayers.

6.2 Transaction, payroll and other taxes

Stamp duties apply to instruments at fixed or ad-valorem rates, including a NGN 50 electronic money transfer levy on transfers of NGN 10,000 or more. The 4% development levy (section 2.1) consolidated the former education, technology, engineering-development and police levies. Sector charges include the 3% petroleum host-community contribution and midstream levies under the Petroleum Industry Act, the banking sector's cybersecurity levy, and excise duties on tobacco, alcohol, sugar-sweetened beverages and telecom services at various rates. States levy land charges, business premises and consumption taxes within constitutional limits; customs duties follow the ECOWAS common external tariff with supplementary levies. There is no net wealth tax, and there are no inheritance or gift taxes.

7.1 Filing, assessment and audit

Companies self-assess and file corporate returns with the Nigeria Revenue Service within six months of financial year-end, based on audited financial statements; a new company files within eighteen months of incorporation or six months of its first year-end, whichever is earlier. Tax due is payable on or before the filing due date, in one lump sum or in instalments approved by the Service ending by the due date. Filing and payment run on the TaxPro Max electronic platform, and tax clearance certificates — evidencing three years of compliance — are required for a wide range of government and banking transactions. Audits and investigations are risk-driven, with desk reviews, field audits and joint state-federal exercises; the standard limitation period for additional assessments is six years, unlimited in cases of fraud, wilful default or neglect.

7.2 Rulings, appeals and penalties

Disputed assessments proceed through objection to the Service, then appeal to the Tax Appeal Tribunal, the Federal High Court, the Court of Appeal and ultimately the Supreme Court. The Joint Revenue Board framework established a tax ombudsman to handle taxpayer complaints and systemic issues. Advance rulings are available on the interpretation of the tax laws, and mutual agreement procedures apply under treaties. Late filing, late payment and withholding failures attract fixed and percentage-based penalties plus interest at prescribed commercial rates; transfer pricing filing failures carry separate administrative penalties. Voluntary disclosure before audit commencement substantially mitigates penalties in practice.

The preceding-year basis means the accounting date drives the assessment cycle: a December year-end company files by 30 June of the following year. Provisional instalments are not required in advance of filing for most companies, but minimum-ETR companies should model quarterly whether a top-up will be due, and free zone entities now file returns notwithstanding exemption. Currency of payment follows the currency of the transaction for foreign-currency-denominated taxes.

9.1 Entity choice

The private limited liability company (Ltd) under the Companies and Allied Matters Act 2020 is the standard vehicle; foreign investors must generally incorporate locally with a minimum share capital of NGN 100 million for wholly foreign-owned companies under current practice directives, register with the Nigerian Investment Promotion Commission and obtain a business permit. Public companies (Plc) serve capital-market ambitions. Free zone entities suit export-manufacturing and services with customs and tax privileges. Unincorporated branches are generally not permitted outside free zones. Partnerships and limited partnerships are transparent and taxed at partner level under state personal income tax administration.

9.2 Structuring and incentives

Inbound investment should be routed with a certificate of capital importation to guarantee repatriation through the official window. Treaty jurisdictions offering the 7.5% withholding rate on dividends, interest and royalties remain preferred holding locations, tempered by principal-purpose-test substance expectations. The economic development incentive credit (5% of qualifying capex for five years) rewards capital-intensive priority-sector projects; free zones remain compelling for exporters. Financing structures must respect the 30% EBITDA cap on foreign related-party interest and transfer pricing documentation thresholds. Groups near the NGN 50 billion turnover mark should model the 15% minimum effective tax rate, since incentives and credits can push the pre-top-up rate below the floor and be partially clawed back.

9.3 Worked effective-rate illustration

A Nigerian manufacturing company earns EBITDA of NGN 2,000,000,000, books depreciation of NGN 300,000,000 and net third-party interest of NGN 200,000,000, so accounting profit before tax is 2,000,000,000 − 300,000,000 − 200,000,000 = NGN 1,500,000,000. For tax, depreciation is added back and capital allowances of NGN 250,000,000 are claimed instead: assessable profit is 1,500,000,000 + 300,000,000 = NGN 1,800,000,000, and total (taxable) profit is 1,800,000,000 − 250,000,000 = NGN 1,550,000,000. CIT at 30% is NGN 465,000,000. The development levy at 4% of assessable profit adds 0.04 × 1,800,000,000 = NGN 72,000,000. The combined charge is 465,000,000 + 72,000,000 = NGN 537,000,000 — an effective rate of 537,000,000 / 1,500,000,000 = 35.8% on accounting profit, comfortably above the 15% minimum ETR. If the after-tax profit were fully distributed to resident individual shareholders, a further 10% final dividend withholding would apply at shareholder level.

9.4 Compliance

Expect electronic filing throughout (TaxPro Max federally, state platforms for PAYE), monthly VAT and withholding cycles, audited IFRS financial statements as the basis of the corporate return, annual transfer pricing declarations above the thresholds in section 2.8, and tax clearance certificates as a recurring gating item for banking, contracts and immigration. Multi-state employers face parallel PAYE registrations in each state of employee residence. Large groups should budget for minimum-ETR computations, CFC monitoring of foreign subsidiaries and the phased e-invoicing mandate, and all businesses should maintain capital-importation and exchange-control documentation alongside tax records.