Nigeria’s House of Representatives has approved and adopted the recommendations of its Committee on Finance, which retains the value added tax (VAT) rate at 7.5%. The previous proposal was to increase to 12.5%, which was set for 2026.
The House also approved the following tax provisions:
Corporate income tax
- The Committee recommended that approval from the National Assembly be required to exempt companies from income tax, a power that the President previously held;
- The 30% income tax rate for all companies, excluding small businesses, has been retained;
- Priority sector companies are required to obtain a certificate to claim capital allowances;
- Free trade zone companies exporting at least 75% of goods/services are exempted from minimum tax and
- Lottery and gaming businesses are exempted from tax.
VAT
A new VAT revenue-sharing formula has been introduced, which is as follows:
- 10% for the federal government,
- 55% for states (including the Federal Capital Territory) based on 20% population and 30% consumption, and
- 35% for local governments;
Excise duty
The proposed 5% excise duty on telecom services has been removed.
Tax administration reforms
- The Committee proposed amending the cost of revenue collection by the Federal Inland Revenue Service (FIRS) by 4%;
- The timeline for issuing Tax Identification Numbers (TINs) has been extended from 2 to 5 working days. However, a new provision has been introduced requiring officials to provide explanations for the delays.
- Companies winding up operations must submit tax returns within three months.
The bills will undergo further consideration in the Senate before becoming law.
