NEW TAX LAW REFORM 2025.
Following extensive reforms signed into Law by President Bola Tinubu on June 26, 2025, the new tax reform is set to take effect on January 1, 2026.
The reforms are aimed at streamlining the tax system, enhancing revenue generation,new measures for individuals , businesses and modernizing tax administration in Nigeria.
The new Legislation consists of four[4] main acts:
- The Nigeria Tax Act [NTA]– which unifies existing tax laws.
- The Nigeria Tax Administration Act [NTAA]– which creates a single administrative structure for Federal taxes.
- The Nigeria Revenue Service[Establishment] Act [NRSA]– which replaces the FIRS with the new Nigeria Revenue Service [NRS] and
- The Joint Revenue Board[Establishment] Act [JRBA]– which improves coordination among different tax authorities.
KEY CHANGES FOR INDIVIDUALS & BUSINESS
- PERSONAL INCOME TAX [PIT]
Notable changes include a Tax exemption for individuals earning up to #800,000 or less annually are now tax-exempted.
RENT RELIEF: A new rent deduction of 20% capped at #500,000 of annual rent is introduced.
TAX RATE: A new progressive tax rates from 0% to 25%
DIGITAL ASSET TAX: Capital gains tax now applies to digital and virtual assets like Crypto currency.
WORLDWIDE INCOME: Nigerian residents are now taxed on their worldwide income.
- CORPORATE & BUSINESS INCOME TAX
SMALL COMPANY EXEMPTION: The annual turnover Threshold for small companies exempt from CIT ,CGT and the new Development levy has increased from #25 million to #50 million . Medium-sized company status has been eliminated.
The CGT rate for companies is raised to 30%.
Large companies or those in Multinational groups are required to meet a 15% minimum effective Tax rate [ETR]
DEVELOPMENT LEVY: A new 4% development levy replaces various overlapping taxes.
ECONOMIC DEVELOPMENT TAX INCENTIVES [EDTI]: A new Economic Development Tax incentives [EDTI] replaces the old pioneer status incentive which provides targeted tax credits for companies in priority sectors.
VALUE-ADDED TAX[ VAT]– The VAT remains at 7.5% but business can now fully recover input VAT on services and capital assets.Essential goods and services such as food, medical products and educational materials are now Zero-rated, allowing for input VAT recovery.
DIGITAL SERVICE TAX: VAT– registered business must use e-invoicing systems and non-resident companies providing digital services must register and remit VAT.
Leave a Reply