The Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, which will take effect on 1 January 2026, as well as the Nigeria Revenue Service (Establishment) Act 2025 and the Joint Revenue Board (Establishment) Act, which came into force on 26 June 2025.
Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee announced that the 2025 Tax Reform Acts had been published in the Official Gazette on 6 September 2025, which includes the versions signed into law by President Bola Tinubu on 26 June 2025.
On 26 June 2025, President Bola Ahmed Tinubu signed the four (4) Tax Reform Bills into law:
- Nigeria Tax Act, 2025
- Nigeria Tax Administration Act, 2025
- Nigeria Revenue Service (Establishment) Act, 2025
- Joint Revenue Board (Establishment) Act, 2025
The Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 will take effect on 1 January 2026, and the Nigeria Revenue Service (Establishment) Act 2025 and the Joint Revenue Board (Establishment) Act entered into force on 26 June 2025.
Collectively, the Tax Reform Acts overhaul Nigeria’s tax landscape to enhance the business environment, drive growth and competitiveness, mobilise sustainable revenue, harmonise, and enable efficient tax administration across all levels of government.
Domestic minimum top-up tax (DMTT)
A top-up tax based on the Pillar 2 framework is introduced for companies with a turnover exceeding NGN 50 billion or part of multinational groups with a turnover of at least EUR 750 million, ensuring a minimum effective tax rate (ETR) of 15%.
The Nigeria Tax Act 2025 introduces new rules on minimum effective tax rates (ETR) following the Pillar 2 framework. Under these rules, if a non-resident subsidiary of a Nigerian company—or a member of the same multinational group—pays income tax below the minimum rate of 15% in any year, the Nigerian parent company must pay the difference to bring the subsidiary’s tax up to the required level. This mechanism works similarly to an Income Inclusion Rule (IIR).
The DMTT rules do not affect approved enterprises in a free zone for their approved operations. However, they do apply to sales made within the customs territory and to any part of an MNE group that meets the EUR 750 million threshold.
Minimum tax for non-resident companies
A minimum tax is introduced for non-resident companies with a taxable presence in Nigeria, based on a percentage of their EBIT or 4% of income generated in Nigeria.
Controlled foreign company (CFC) rules
Controlled Foreign Company (CFC) rules are introduced to tax undistributed profits of foreign subsidiaries controlled by Nigerian companies if such profits could have been distributed without harming the business.
Development levy
A new Development Levy of 4% on assessable profits replaces the Tertiary Education Tax (TET), IT Levy, NASENI Levy, and Police Trust Fund (PTF) Levy, excluding small companies.
Small company exemption threshold
The exemption threshold for small companies is increased to an annual gross turnover of NGN 50 million and total fixed assets not exceeding NGN 250 million, exempting them from corporate income tax, capital gains tax, and the Development Levy.
Capital gains tax (CGT) rate
The capital gains tax (CGT) rate has risen from 10% to 30%. New regulations now extend CGT to include the indirect sale of shares in Nigerian companies, even when conducted through offshore holding companies, although treaty exemptions may still apply. Additionally, the CGT exemption for selling shares in Nigerian companies has been increased to NGN 150 million over any 12-month period, provided the gains do not exceed NGN 10 million.
Other provisions for DMTT
- The law introduces a domestic minimum top-up tax (DMTT) to ensure companies pay at least a 15% effective tax rate (ETR) on their profits. If a company’s ETR falls below 15% in any assessment year, it must calculate and pay extra tax to bring its rate up to 15%.
- The ETR is based on covered taxes, which include corporate income tax, petroleum profit tax, hydrocarbon tax, development levy, and priority sector tax credit.
- Net income is defined as profit before tax from audited financial statements, excluding franked investment income and unrealised gains or losses.
- For life insurance companies, net income does not include policyholder premiums or investment income.
