On 26^th June 2025, the President of the Federal Republic of Nigeria signed four landmark tax reform bills into law, marking a significant shift in the nation’s tax landscape. The laws are the Nigeria Tax Act (Ease of Doing Business), the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Once operational, these laws are expected to simplify tax administration, improve compliance, enhance revenue generation, and foster a more business-friendly environment. The implementation of the newly signed four tax fiscal reform laws will commence by 1^st January 2026.

This article outlines some notable highlights of the Acts that individuals and businesses should be aware of.

Key Highlights of Nigeria’s Newly Signed Tax Reform Acts

Some of the highlights of the newly signed Tax Reform Acts include:

1. Personal Income Tax Relief: Low-income earners earning NGN800,000 or less per annum are completely exempted from personal income tax under the Nigeria Tax Act (NTA). 25% personal income tax applies only to individuals earning above N50 million annually. The Act also increases the tax exemption threshold for compensation for loss of employment or injury from NGN10million to NGN50million.
2. VAT Exemptions on Essential Goods and Services: Essential goods and services including food items, medical equipment and services, pharmaceuticals, tuition fees, electricity, educational books and materials, exports (excluding oil and gas exports) etc., are exempted from VAT. The impact of this is that businesses selling these goods and services can recover their VAT costs, despite the zero rate.
3. Establishment of Nigeria Revenue Service (NRS): The Federal Inland Revenue Service (FIRS), the agency established to regulate the collection of tax in Nigeria has now become Nigeria Revenue Service (NRS). The Nigeria Revenue Service (Establishment) Act repeals the current Federal Inland Revenue Service Act and defines the NRS’ expanded mandate, including non-tax revenue collection of other agencies such as the Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Nigeria Ports Authority (NPA), among others. The Bill also lays out transparency, accountability, and efficiency mechanisms. The Acts also provide that State Internal Revenue Services (SIRS) will be autonomous in the running of their affairs.
4. Increase in Tax Exemption Threshold for Small Companies: Prior to the assent of the Acts, only small companies with an annual gross turnover of less than N25m were exempted from tax. Under the new Acts, there is an increase in the tax exemption threshold for small companies from annual gross turnover of N25m to N100m. Thus, small companies with gross turnover of N100m and below and total fixed assets not exceeding NGN250million are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT) and the newly introduced Development levy.
5. Increased Capital Gains Tax (CGT) rate – The NTA increases the CGT rate from 10% to 30% for companies, aligning the CGT and CIT. For individuals, capital gains will be taxed at the applicable income tax rate based on the progressive tax band of the individual.
6. Introduction of Development Levy – Nigerian companies except small companies will pay a “Development Levy” at 4% of their assessable profits. 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.
7. Introduction of Economic Development Incentive – The Acts replace the “pioneer” tax holiday with a new Economic Development Incentive (EDI), offering a 5% annual tax credit for 5 years on qualifying capital expenses made by eligible companies within 5 years from production start. Unused credits can be carried forward for another 5 years, after which they expire.
8. 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 ETR of 15% of their “Net Income”. This rule does not apply to Free Zone companies on their exports out of Nigeria, provided that such companies are not part of multinational groups.
9. Introduction of the Office of Tax Ombuds: Under the new Acts, an Office of Tax Ombud has been introduced to protect taxpayers against arbitrary tax assessments. The Tax Ombuds office will 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.
10. 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.
11. Powers for AGF to Deduct Taxes: The new laws grant the Attorney General of the Federation (AGF) powers to deduct unremitted taxes by a government or MDA and pay to the beneficiary government.
12. VAT and CIT Rates Remain the Same: Under the new laws, Value Added Tax (VAT) remains at 7.5% and Company Income Tax (CIT) for large companies remains at 30%, without any increment. However, the 30% rate can be reduced to 25% effective from a date as may be determined in an Order issued by the President on the advice of the National Economic Council.
13. Tax Incentives for Agricultural Companies: Income generated by companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry, dairy, cocoa processing and manufacturing of animal feeds will be exempt from income tax for the first five (5) years from commencement of business.

Other notable reforms introduced by the new Acts include; transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties, ceding of 5% of VAT revenue to states by the federal government, tax break or incentives for employers to hire more people, tax exemption on personal effects not exceeding N5m, VAT exemption on purchase of real estate, amongst others.

Conclusion

The signing of the four landmark tax reform Acts in Nigeria marks a significant transformation in Nigeria’s tax regime. The reforms introduced by these Acts are expected to reduce the tax burden on vulnerable groups, encourage MSME growth, and stimulate foreign and local investments. Businesses are advised to reassess their compliance strategy and consult with legal or tax professionals to understand how the new laws affect their operations.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

In October 2022, Nigerian president at the time, signed the Start-up Act, which aimed to enhance the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups.

As a result of this Act, there has no doubt been a lot of regulatory attention on Start-ups, with regulatory compliance becoming an important factor for new companies to consider.

A start-up can be referred to as a company that is in the early or initial stages of business or development. According to the Nigerian Startup Act, 2022, a start-up is a company which has been in existence for a period not more than 10 years.

Generally, all companies, whether start-ups or not, must satisfy certain regulatory requirements in order to remain operational and avoid sanctions by regulators. It is therefore necessary for Start-ups to stay informed of the compliance requirements relevant to them and to comply with those requirements.

Below are some of the regulatory requirements Start-ups should watch out for

1. Incorporation of Company

It is a mandatory requirement that all businesses in Nigeria must be incorporated with the Corporate Affairs Commission (CAC) in accordance with the Companies and Allied Matters Act (CAMA), 2020. Incorporation grants your company legal identity and is mandatory before an organization commences business. For official information and updates on company incorporation and compliance, visit the Corporate Affairs Commission’s Public Notes 

2. Regulatory Compliance for Tax Registration and Filings

Start-ups must register with the Federal Inland Revenue Service (FIRS) and State Inland Revenue Service for remittance of Company Income Tax (CIT), Value Added Tax (VAT), Personal Income Tax and Withholding tax (WHT) where applicable.

Upon registration with the FIRS, a company is issued a Tax Identification Number (TIN), which serves as the company’s identification number for all dealings with the federal tax authorities. Failure to register for tax will attract sanctions from the FIRS.

The first CIT must be filed within 18 months of incorporation, and subsequently within six months of their financial year-end. Companies are also required to file and remit VAT on or before the 21^st day of the month following that which the transaction was made.

Remittance of Personal Income Tax or PAYE (Pay As You Earn) on behalf of local employees are to be filed monthly to the state government where the worker resides on or before the 10^th day of the month following the month of deduction.

Additionally, employers are required to file annual PAYE returns not later than 31^st January in respect of all employees in its employment in the preceding year.

WHT returns are to be filed monthly within 30 days from the date the amount was deducted or the time the duty to deduct arose. Failure to file the relevant tax returns result in penalties and tax liabilities.

3. Post incorporation filings

Any changes in any company’s structure, such as directorship, shareholding, registered address, etc. must be filed with and approved by the CAC. Annual returns (Statement of Affairs if the company has not commenced business) must also be filed to maintain active status with the CAC. For start-ups, the first annual returns must be filed within 18 months of incorporation of the company and subsequently on an annual basis. Failure to file annual returns could result in the company being declared inactive and ultimately deregistered. Also, late filing of annual returns attracts a penalty for each year of default.

4. Industry-Specific Licenses and Permits

Depending on the sector in which you operate, specific licenses or permits from regulatory bodies may be required. For example, sports betting companies require licenses from the state lottery boards and financial services companies require licenses from the Central Bank of Nigeria, Securities and Exchange Commission etc. For a company with foreign participation, it is required to obtain a business permit from the Federal Ministry of Interior which allows the company to commence business operations in Nigeria.

5. Mandatory Meetings for Regulatory Compliance

Companies are mandated to hold Annual General Meetings (AGM) and board meetings. Companies may hold extraordinary general meetings as they deem fit. For a start-up company, the first AGM must occur not later than 18 months of incorporation, with subsequent AGMs held no later than 15 months after the last AGM. Regarding board of directors’ meeting, the first board meeting should take place within six months of incorporation. Subsequently, the Directors may have meetings from time to time as they deem necessary.

6. NSITF Contribution and Pension

Employers must contribute 1% of their employee monthly payroll to Nigerian Social Insurance Trust Fund (NSITF) every year and remit monthly pension contribution of 8% for the employee and 10% for the employer with an approved Pension Funds Administrator (PFA) not later than 7 days of payment of salary every month. Start-ups must make their first NSITF contribution within two years of commencing operations. Companies that fail to make the required contribution to NSITF, shall pay a fine of at least 2% of the amount due to be remitted, in addition to the amount to be paid.

7. Nigerian Data Protection Commission Registration and Data Audit

Companies controlling or processing personal data must register with the Nigerian Data Protection Commission (NDPC) and file annual data audit reports. These companies are referred to as data controllers and data processors of major importance. Start-ups that control and process data are mandated to register with the NDPC upon incorporation failure to do so or late registration incurs penalties.

8. Brand Protection

Although not mandatorily required, Start-ups and existing companies are advised to protect their intellectual property or intangible assets by registering trademarks, patents, and copyrights with the Federal Ministry of Industry, Trade, and Investment. This prevents competitors from unlawfully copying, counterfeiting and registering your brand.

9. Corporate Governance

In Nigeria, companies are required to adhere to corporate governance best practices to ensure proper management. Companies in some specific industries are also required to set up sub-committees to effectively undertake the business of the companies. For example, some corporate governance requirements can be found under CAMA 2020, the Nigerian Code of Corporate Governance (NCCG), 2018, the Code of Corporate Governance for Public Companies (CCGPC) 2011; Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014, amongst others. Start-ups are required to comply with the codes relevant to their industries.

9. Nigerian Investment Promotion Commission (NIPC) Registration

The Nigerian Investment Promotion Commission (NIPC) is a government agency established to encourage, promote and coordinate investments in Nigeria. Whether wholly or jointly owned by foreigners, start-ups intending to operate in Nigeria must register with the NIPC before the commencement of business operations.

10. National Office for Technology Acquisition and Promotion (NOTAP) Registration

Nigerian companies seeking to enter into contracts or agreements with a foreigner for the transfer of foreign technology to Nigerians are expected to register the contracts with NOTAP. Failure to register the contract will however not affect the validity of the contract but will prevent the Nigerian entity from making payments from Nigeria through any licensed bank in Nigeria to any person outside Nigeria.

11. Special Control Unit Against Money Laundering (SCUML) Registrations

Designated Non-Financial Institutions (DNFIs) which include construction, consulting, financial services, tax companies, etc. must register with the Special Control Unit Against Money Laundering (SCUML) of the Economic and Financial Crimes Commission (EFCC) and obtain a registration certificate. DNFIs are also expected to submit their cash-based transaction reports and Currency Transaction Reports to SCUML for onward forwarding to the Nigeria Financial Intelligence Unit (NFIU).

Conclusion

Almost three years after The Start-up Act, was signed into law, the jury is still out as to whether or not it has made any difference at enhancing the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups. There are numerous and enormous mandatory regulatory requirements which Start-ups (and existing companies) must comply with in Nigeria. Navigating regulatory landmines in Nigeria is vital for the success and sustainability of any business. Regulatory compliance keeps companies legally protected, helps them  identify and mitigate risks and enhances operational efficiency.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact: