Nigeria has enacted new tax reforms through four new laws signed on June 26, 2025: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (NRS) (Establishment) Act, and the Joint Revenue Board (Establishment) Act.

Gazetted on 11 September 2025, the legislation replaces over a dozen older statutes. The measures, effective from January 1, 2026, are intended to increase Nigeria’s tax-to-GDP ratio from around 10 per cent, one of the lowest in Africa. A five per cent fuel surcharge included in the package has been postponed to limit cost-of-living pressures.

Those earning below ₦800,000 annually

Low-income earners remain largely outside the tax net. Annual incomes up to ₦800,000 are exempt from personal income tax, covering workers close to the minimum wage and much of the informal economy. Where records are absent, a presumptive tax will apply, with rates determined by the finance minister. Rent deductions of up to 20 per cent or ₦500,000 are also available. Food and education continue to be VAT-exempt, shielding household budgets from further strain.

Those earning above ₦800,000 annually

Individuals above this threshold face a progressive personal income tax structure. Rates rise from seven per cent up to 25 per cent for those earning above ₦50 million, compared with a previous 24 per cent ceiling. Taxable income now includes global earnings of residents, non-cash benefits such as rent-free housing, and capital gains from assets including cryptocurrencies. Gratuities are now taxable, though compensation for job losses up to ₦50 million remains exempt. Reliefs are available for primary residences and up to two vehicles.

Small businesses with turnover below ₦100 million

Small firms with turnover under ₦100 million and assets below ₦250 million are exempt from corporate income tax, capital gains tax, and a new four per cent development levy. Professional services firms are excluded from this category. Registration with the Corporate Affairs Commission is required to access exemptions, alongside a tax identification number, which banks will demand for account operations. Businesses must also adopt digital tools such as e-invoicing.

Large corporations and multinationals

Companies with turnover above ₦100 million continue to pay corporate tax at 30 per cent, though the president may approve a reduction to 25 per cent for strategic sectors such as manufacturing or renewables. Multinationals and firms with turnover above ₦20 billion are subject to a 15 per cent minimum effective tax rate. Offshore subsidiaries’ undistributed profits are taxable, while top-up taxes apply if foreign arms pay less than 15 per cent. Non-resident companies in shipping, aviation, or digital services must pay a two per cent levy on gross Nigerian earnings, or four per cent where profits are not clearly established. Indirect offshore asset transfers attract a 30 per cent capital gains tax.

The reforms, while sparing the poorest, shift the tax burden to wealthier individuals and larger firms. Nigerians on social media, especially on X, observed by the Guardian, warn of economic difficulties for salaried workers and mid-sized businesses, while supporters highlight simplified laws and incentives like 5 per cent credits for green energy investments.

The NRS has said it will strengthen digital enforcement and urged taxpayers to prepare before the reforms take effect on 1 January 2026.