As part of its broader fiscal reform agenda, the Federal Government has introduced several tax and policy changes aimed at deepening Nigeria’s capital market and attracting new investment. The goal is to reduce the cost of doing business, simplify compliance, and make the financial ecosystem more efficient and investor-friendly.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said that the new tax reforms aim to harmonise Nigeria’s complex tax structure, make Nigeria an attractive hub for digital nomads and business outsourcing, encourage formalisation of informal business by reducing the tax burden, increase the efficiency of tax collection, and promote a more transparent, fair, and competitive economic environment.
Elimination of Withholding Tax (WHT) on Bonus Shares
The government has removed Withholding Tax on bonus shares, a move widely welcomed by investors. Bonus shares are issued to reward shareholders, not new income, so taxing them previously discouraged long-term equity holding. This exemption signals a policy shift toward supporting wealth creation through the capital market and encouraging Nigerians to invest and stay invested.
Easier Business Restructuring through Tax Exemptions
Mergers, acquisitions, and corporate reorganisations will now enjoy tax exemptions. By removing taxes on internal restructuring, companies can consolidate, scale, and strengthen balance sheets without facing immediate tax penalties. This policy is expected to stimulate merger activity, improve efficiency, and position local firms to compete more effectively in regional and global markets.
Level Playing Field for Listed and Unlisted Companies
Historically, listed entities often faced stricter compliance requirements compared to unlisted firms, discouraging private companies from going public. The new reform aims to bridge that gap, ensuring fair tax treatment across both categories. This balance could boost listings on the Nigerian Exchange and deepen capital formation within the formal sector.
Stamp Duty Exemption on Share Transfers
Documents relating to the transfer of stocks and shares are now exempt from stamp duty. This is a practical relief that reduces transaction costs for investors and brokers, making share trading more efficient. By lowering these frictional costs, the government hopes to encourage more trading activity and liquidity in the market.
Reduced Taxes on Productive Investments
Investors will now be able to claim input VAT credits on capital assets. This is significant because it lowers the effective cost of new investment in machinery, equipment, and expansion. The measure recognises that productive investment should be encouraged, not taxed at multiple stages of the value chain.
Planned Cut in Companies’ Income Tax (CIT) from 30% to 25%
Reducing the company’s Income Tax rate represents a strong pro-business signal. A lower corporate tax burden allows businesses to reinvest more of their profits into operations, wages, and expansion. Over time, this could boost corporate profitability, stimulate hiring, and make Nigeria more competitive against regional peers like Ghana and Kenya.
Harmonisation of Earmarked Levies
Levies such as the TETFund, NITDA, and NASENI contributions have long been sources of compliance complexity and multiple taxation. Their harmonisation will simplify reporting obligations and reduce administrative costs for companies, allowing management to focus more on productivity and less on paperwork.
Repeal and Streamlining of Over 60 Taxes to Fewer Than 10
Nigeria’s tax system has often been criticised for its difficult, with over 60 overlapping taxes and levies imposed at federal, state, and local levels. The reform seeks to merge these into fewer than ten, a massive simplification that could greatly improve Nigeria’s “Ease of Paying Taxes” ranking and attract new business investments.
Tackling the Proliferation of Agency Levies
Regulatory agencies like the Financial Reporting Council (FRCN) and others have, in recent years, introduced extra levies beyond statutory taxes. The government now plans to curb such duplication through stricter oversight. This ensures companies are not paying different charges on the same income to multiple agencies, thereby improving fairness and predictability.
Removal of Minimum Tax on Turnover or Capital
The elimination of minimum tax on company turnover or capital is another welcome move. Previously, firms were required to pay a minimum tax even when unprofitable, a rule that hit startups and struggling businesses the hardest. Removing it gives breathing space to companies still finding their footing, helping them recover and reinvest.
CGT Exemptions for REITs and Securities Lending
Capital Gains Tax exemptions for Real Estate Investment Trusts (REITs) and securities lending are designed to boost market sophistication and liquidity. These instruments are key to a modern financial system. By exempting them from CGT, the government signals support for institutional investment and long-term market development.
State Government Bonds and Fixed Income Incentives
Income from state government bonds will now be tax-exempt, encouraging more local participation in sub-national financing. Similarly, fixed-income investors will benefit from Personal Income Tax exemptions or final Withholding Tax treatment. This ensures that investment in government-backed securities remains attractive and competitive.
Reliefs for Foreign Investors
To attract more foreign capital, the government is proposing lower WHT rates on dividends and interest income and a review of TIN (Tax Identification Number) requirements. These measures reduce administrative barriers and make Nigeria a more accessible and investor-friendly market for global funds.
