Multinationals operating in Nigeria are not only facing tougher compliance rules under new tax laws, but they are also poised to benefit from several new incentives built into the country’s evolving tax framework.
These changes, quietly embedded in the latest legislation, are designed to level the playing field between foreign and local companies and, in some cases, reduce operational costs.
A senior tax lead at a multinational in Nigeria, who asked not to be named, said the new rules go beyond enforcement and introduce meaningful reliefs. “Multinationals now enjoy the same benefits as local companies,” he explained. “For example, the old pioneer status incentive has been scrapped and replaced with an Economic Development Incentive (EDI). EDI gives a 5 percent tax credit on verifiable investments in priority sectors. In the past, a foreign company often needed political connections or a physical footprint to access pioneer status, while a local company could manoeuvre its way to getting it. Now there is a clearer route to relief.”
He explained that this shift matters for competitiveness. “If a local company enjoys tax holidays while a multinational does not, the local firm’s cost base will be lower. The multinational’s products or services will cost more, making it harder to compete. EDI removes some of that imbalance.”
Easier hiring without a permanent presence
One of the less publicised changes affects hiring. Until now, foreign entities were required to register for Pay‑As‑You‑Earn (PAYE) remittance in Nigeria before employing staff here. The new law allows multinationals that do not wish to create a permanent establishment (PE) in Nigeria to engage local employees without that burden. “This is a big one,” the head of tax expert noted. “In the past, some companies avoided hiring in Nigeria because registration would create a taxable presence. Now they can tap into Nigerian talent without that step.”
He cited an example: “Most of the companies like Standard Chartered Bank have their customer‑care operations in places such as Malaysia, but they were not coming to Nigeria because they felt that employing staff here would force them to register and create a permanent establishment. Under the new law, that concern is removed.”
This will create opportunities and make the teeming young population competitive in the global job market.
Refunds on excess VAT are now possible
Another benefit is in value‑added tax. Previously, service‑oriented multinationals could not recover input VAT against output VAT, a relief largely reserved for manufacturers. That has changed. “If our output VAT exceeds our input VAT, the government is now expected to refund the excess,” the tax lead said. “Before, we simply lost that money.”
Levies consolidated and donations clarified
Multiple development levies that once piled up on companies, such as the three percent education tax, one percent NASENI levy and Police Trust Fund contributions, have been harmonised into a single 4 percent Development Levy. “We no longer have to track different rates and deadlines,” he added.
There is also clarity on corporate donations. “In the past, the tax office could disallow certain donations for deduction. Now, as long as a donation is not more than 10 percent of profit after tax, it is acceptable,” he explained.
Other niche perks
Further reliefs include clearer VAT treatment for companies dealing with chargeable fossil fuels, and a more predictable framework for multinationals providing services or trading in VAT‑able products. “We can plan better now,” the tax expert said.
A two‑sided coin
While these incentives exist, he emphasised that they sit alongside the tougher compliance measures already in force, such as the global minimum tax and controlled foreign company rules. “It’s a balance,” he said. “There are more costs in some areas, but there are also genuine benefits. Multinationals that study the law and align their structures can reduce costs and stay competitive.”
The broader outlook
These reforms mark a shift in Nigeria’s approach to corporate taxation. Beyond tightening rules to plug leakages, the government is also sending signals to investors: operate transparently, invest in priority sectors, and you will be rewarded with clearer, fairer incentives.
