The new tax law in Nigeria has brought four new tax statutes into existence. The new laws were distilled from a harmonisation of all tax laws previously in force in the country. The four statutes – Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025, Nigeria Revenue Service (Establishment) Act 2025, and Joint Revenue Board (Establishment) Act 2025 – will govern the tax landscape in Nigeria with effect from 2026.
While the tax law seems to have gone to great lengths to simplify tax procedures, engender administrative equity, reduce the tax burden on low-income earners, incentivise small businesses, encourage large-scale investments, and enhance fiscal justice in anticipation of a high degree of mutual understanding, transparency, and voluntary compliance, there is no gainsaying the fact that disputes over tax assessments, administrative proceedings, and regulatory enforcement are still bound to occur.
Though Nigeria’s tax system has long been criticised for being fragmented, complex, and difficult to navigate. With multiple laws governing income tax, capital gains, VAT, and stamp duties, compliance often requires expert intervention. In June 2025, the Federal Government took a decisive step to address these challenges by signing four major pieces of tax legislation into law. These include the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Joint Revenue Board of Nigeria Act 2025, and the Nigeria Revenue Service Act 2025.
Together, these laws introduce a unified and modern tax regime designed to streamline administration, close loopholes, and improve transparency. The new system officially takes effect from January 1, 2026, giving individuals and businesses a limited window to understand and prepare for the changes.
One of the most significant reforms is the consolidation of income and capital gains taxation. Previously, companies paid income tax under the Companies Income Tax Act at 30 percent, while capital gains were taxed separately at 10 percent. Under the new Nigerian Tax Act, all company profits, including capital gains, are combined and taxed at a flat rate of 30 percent. This means businesses must now consider the tax implications of asset sales as part of their overall profit planning.
So, for individuals, capital gains are no longer taxed separately but are assessed under personal income tax rates. This change has important implications for investors, entrepreneurs, and professionals who earn income from asset disposals. It makes proper financial planning more important than ever, especially when applying for loans or making long-term investment decisions.
Another major development is the introduction of a minimum effective tax rate of 15 per cent for qualifying multinational companies. This rule ensures that large companies operating in Nigeria cannot reduce their tax burden below this threshold through aggressive tax planning. While this primarily affects multinational enterprises, its ripple effects may be felt across supply chains, pricing structures, and employment decisions.
According to the Chairman of Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, an expert in taxation and fiscal matters, said that the tax reforms aimed at improving revenue, fostering economic growth, and simplifying Nigeria’s complex tax system. It should also be noted that the new tax law ushered in a Controlled Foreign Company framework.
Now, Nigerian companies with controlling interests in foreign subsidiaries may be taxed on undistributed foreign profits unless they can justify why such profits cannot be repatriated. This is aimed at reducing profit shifting and strengthening Nigeria’s tax base. And, for small and medium-sized businesses, the new tax law brings both clarity and responsibility. The flat corporate tax rate simplifies calculations, while small companies below the prescribed turnover threshold remain exempt from corporate income tax. However, compliance expectations are higher, and accurate record-keeping is no longer optional.
As the new tax takes effect, individuals and businesses are encouraged to assess the impact of the new tax laws on their income, update internal processes, and seek professional guidance where necessary. The new Nigerian tax regime represents a shift toward efficiency and accountability, and those who prepare early will be best positioned to thrive.
Let’s abide by the rules and regulations of the new tax law, and this submission also provides an essential guide to taxable persons in Nigeria on the pitfalls to avoid in the new dispensation and the various settlement mechanisms available to parties to a tax dispute. While tax offences and regulatory penalties pose potential reputational risks and financial loss to non-compliant entities, keeping abreast of the rights and obligations and the defence mechanisms that are available in the law will enhance compliance and also ensure legal protection for compliant taxpayers.
Òrúnbon, a journalist, writer, poet and public affairs analyst. Can be reached via orunbonibrahimademola@gmail.com or 08034493944 and 08029301122.
