Finally! The Nigerian Tax Reform Acts are Here!

Introduction

Arguably, since August 2023, Nigeria’s tax reforms have been on the front burner, shaping every important conversation and business consideration. Despite various controversies surrounding initials proposals, particularly with respect to its potential economic impacts, the proposed increment of Value Added Tax (VAT) rate and sharing formula, the reform efforts finally yielded significant fruit. With the assent of President Bola Tinubu on 26^th June 2025 to the four Tax Reform Bills (now Acts) to usher in a new dawn in Nigeria’s tax and fiscal regime, Nigeria’s tax and fiscal landscape has witnessed a landmark overhaul. Upon the President’s assent, the Nigeria Tax Act (NTA), The Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service Act (NRSA) and the Joint Revenue Board Act (JRBA) collectively referred to as “the Reform Acts” formally became law.

The Acts formally repeals various existing tax laws and consolidates all relevant tax legislations into a single legislative document. The Acts, amongst other things, aim to simplify tax administration, eliminate conflicting or ambiguous tax provisions and provide a comprehensive and transparent view of tax laws, and frameworks while also enhancing revenue generation, improving compliance and fostering economic growth. Notably, while the formal effective date of the legislation is yet to be communicated, it is anticipated that the Acts would take effect from 1^st January 2026. Here, we share some of the key highlights and innovations of these Acts.

Key highlights of the Reform Acts

Repeal, Revocation, Amendment and Unification of Nigeria’s Fiscal Legislations

In line with the objectives of the Reforms, the NTA repeals, and provides in a single document the provisions of, amongst others the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Stamp Duties Act, and Value Added Tax Act while amending various other legislations, such as the Petroleum Industry Act, the Tertiary Education Trust Fund (Establishment, etc.,) Act. The NTA also revokes the VAT (Modification) Order 2021. This move is intended to streamline the tax system by reducing the number of taxes and eliminating duplications, thereby simplifying tax considerations in business operations.

Establishment and Mandate of the Nigeria Revenue Service (NRS)

A pivotal administrative change under the new regime is the establishment of the Nigeria Revenue Service (NRS) – putting an end to the existence of the Federal Inland Revenue Service (FIRS) pursuant to the NRSA. This new agency is designed to be more autonomous and performance-driven, with an expanded mandate that includes the collection of non-tax revenue in addition to taxes. The NRS is to establish a uniform legal and operational framework for tax administration while aiming for greater efficiency in revenue collection.

Clarification and expansion of categories of Taxable Income

The Acts also explicitly broaden the scope of income, profits, or gains subject to tax. This now includes prizes, winnings, honoraria, grants, awards, and specifically, profits or gains from transactions in digital or virtual assets. While such gains are taxable, any losses incurred from transactions in digital assets can only be deducted against profits derived from the digital assets business. Furthermore, the definitions of “interest” and “dividend” have been expanded to capture a wider range of financial accruals, such as penal interest, foreign exchange differences relating to securities, and distributions of a capital nature for liquidating companies.

Controlled Foreign Corporation (CFC) Rules

The NTA also introduces robust provisions to address profit shifting by its introduction of CFC Rules. By this provision, where a foreign company is controlled by a Nigerian company, and it has not distributed profits, the proportion of those profits attributable to the Nigerian company which could have been distributed without business detriment would be deemed as distributed and included in the Nigerian company’s profits for tax purposes. You may read our analysis of the Rule here.

Minimum Effective Tax Rate (ETR):

In alignment with the OECD’s BEPS Pillar 2 framework, the Act introduces a tax top-up mechanism by introducing a 15% ETR for companies which are constituent entities of a Multinational Enterprise (MNE) group or have an aggregate turnover of ₦20 billion and above. If the effective tax rate paid by such a company is less than 15%, the Nigerian parent company must pay an additional amount to meet this minimum rate. This measure discourages the use of low-tax jurisdictions for profit shifting.

Small Companies and CIT Rates

Previously, small companies are defined as companies with a turnover of less than N25,000,000.00 while medium sized companies were companies with annual turnover between N25,000,000.00 – N100,000,000.00 and subject to CIT at the rate of 20%. However, the NTA has redefined small companies to mean companies with an annual gross turnover of NGN100,000,000 and below and total fixed assets not exceeding N250,000,000.00 while deleting provisions for medium sized companies.

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