Nigerian Tax Reforms, 2025

Economic Context

Nigeria’s ICT sector saw its growth slow from 6.3% to 5.9% year-on-year between Q4 2023 and Q4 2024, largely due to rising costs and economic pressures. The 50% increase in telecom tariffs in early 2025 by the Nigeria Communications Commission (NCC) may have made ICT services less affordable for many consumers. Operators also faced higher costs from naira depreciation, inflation, and fuel subsidy removal among other pressures. ​

Despite the slower growth, the sector’s contribution to GDP increased from 16.7% in Q4 2023 to 17.2% in Q4 2024, underscoring its growing importance to the Nigerian economy. This rise can be attributed to a combination of factors such as the large base effect from previous years of rapid expansion, and the capital-intensive nature of ICT, which amplifies its economic footprint. Additionally, the sector’s maturity means it now underpins a wide range of economic activities, from digital payments to e-commerce and remote services.​

Looking ahead, the outlook for the ICT sector remains positive. Improved infrastructure expansion, supportive policy initiatives, and technological innovation are expected to unlock new growth opportunities. As more consumers and businesses adopt digital platforms, the sector is well-positioned to drive financial inclusion, enhance service delivery, and boost productivity across the economy. ​

Nigeria’s ICT sector faces a complex fiscal environment. Companies have been subject to a 30% Corporate Income Tax (CIT) in addition to a patchwork of sector-specific levies, including a 1% Information Technology (IT) Tax and a 0.25% National Agency for Science and Engineering Infrastructure (NASENI) Levy. These levies, each calculated on different profit bases, have created significant compliance complexity and increased the cost of doing business. The Nigeria tax reforms aim to address some of these issues and streamline tax administration for the sector. Key changes include:​

• A unified Development Levy - The Act consolidates several overlapping levies(also called “earmarked taxes”)—including the Tertiary Education Tax, IT Tax,NASENI Levy, and Police Fund Levy—into a single Development Levy imposed at 4% of assessable profits (i,e. tax profits before deducting tax depreciation and losses). The revenue from the Development Levy is earmarked for strategic national priorities: education (50%), student loans (15%), technology development(8%), science and engineering infrastructure (8%), technology incubation (4%), defense and security (10%), and cybersecurity (5%). 
• Claim of capital allowances – The NTA provides for capital allowances for all qualifying capital expenditure to be claimed on a straight-line basis. I.e. in equal annual instalments over their useful life. This replaces the previous mix of initial and annual allowances that often followed a reducing balance method and is part of the broader goal to simplify tax compliance. Capital allowances will only be prorated against taxable and exempt income, where the non-taxable income constitutes at least 10% of the total income of a company.

Connecting the dots​

The NTA marks a decisive shift towards a more unified, transparent, and modern fiscal regime for the ICT sector. By consolidating multiple levies into a single Development Levy, the Act simplifies compliance, reduces administrative burdens, and aligns tax revenue with national priorities that are directly relevant to the sector’s growth and sustainability. 

Economic context

Between Q4 2023 and Q4 2024, Nigeria’s manufacturing sector experienced modest real GDP growth, rising from 1.5% to 1.8%. However, its contribution to overall GDP slightly declined from 8.2% to 8.1%, underscoring persistent underperformance. The sector continued to face structural challenges including high production costs, foreign exchange shortages, unreliable electricity supply, and subdued consumer demand. Although reforms such as the removal of fuel subsidies and unification of foreign exchange rates were introduced, their impact was limited due to broader macroeconomic instability and weak policy coordination.​

Future growth hinges on effective reforms, infrastructure upgrades, and support for local production. Initiatives like the National Infrastructure Plan, power sector reforms, and improved access to finance and raw materials could ease bottlenecks. However, persistent structural challenges and economic headwinds may keep growth modest in the near term.​

Key updates

• New definition of “Nigerian company” – The Nigerian Tax Act (NTA) expands the definition of a “Nigerian company” to include not only companies incorporated or registered under any law in Nigeria, but also those whose central or effective place of management or control is in Nigeria. This marks a shift from the current legislation, where only companies or Limited Liability Partnerships set up in Nigeria were considered Nigerian companies for tax purposes. As a result, foreign-incorporated companies that are centrally and/or effectively managed or controlled from within Nigeria will now be subject to tax in Nigeria on their global income (subject to treaty considerations). The definition underscores the importance of evaluating the actual substance of foreign companies in Nigerian headquartered groups, particularly in relation to governance structures and the location where strategic decisions are made.
• Introduction of Development Levy – Nigerian companies except small companies and non-resident companies, will pay a “Development Levy” at 4% of their assessable profits (I.e. taxable profits adjusted for capital gains/losses before deducting tax depreciation and trading losses). The Development Levy consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT), the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy.
• Controlled Foreign Company rules – The NTA imposes a tax on undistributed profits of foreign companies controlled by Nigerian companies, where it is considered that the foreign subsidiary could have distributed dividends without harming its business. ​It is not clear how the rules may play out if the dividends are eventually brought into Nigeria; considering the separate rules that exempt dividends brought into Nigeria through the banks from tax. This may imply that the companies would need to obtain a refund from the NRS.

Key takeaway​

Nigeria’s outdated tax laws have long hindered investment in key sectors such as manufacturing, agriculture, agro-processing, airlines, logistics, consumer goods, and retail. Businesses across these industries have faced persistent challenges including multiple taxation, difficulty in obtaining tax refunds, inability to claim input costs, and high interest rates. The newly enacted Tax Reform Acts aim to address these systemic issues by streamlining tax administration, introducing clearer compliance frameworks, and reducing the overall cost of doing business. These reforms are expected to stimulate investment, enhance productivity, and create a ripple effect across the economy—contributing to inflation reduction, job creation, and poverty alleviation. 

Economic context

Nigeria’s banking and financial services sector has shown strong growth, increasing its GDP contribution from 5% in Q4 2023 to over 6.1% in Q4 2024, with a growth rate exceeding 30%. This reflects rising economic activity and the sector’s expanding national impact.​

Key drivers include digital adoption, reforms by the Central Bank of Nigeria (CBN), fintech innovation, and improved insurance penetration. Investor confidence in digital banking and mobile money also boosted performance.​

Although inflation and foreign exchange volatility may pose challenges, the outlook for the sector remains positive. Growth is expected to continue, supported by financial inclusion, digital infrastructure, and regulatory reforms.​

Key update

• Key tax obligations and compliance Changes​: The NTA and NTAA collectively represent a paradigm shift in Nigeria’s approach to tax administration and financial sector regulation. By expanding the regulatory perimeter, recalibrating reporting requirements, and embracing the realities of digital finance, these Acts position Nigeria to better safeguard its fiscal interests, promote financial integrity, and foster a more transparent, inclusive, and resilient financial system. Financial institutions must view these reforms not merely as compliance obligations, but as strategic imperatives that will shape the future of banking and finance in Nigeria.

Connecting the dots​

The NTA and NTAA collectively represent a paradigm shift in Nigeria’s approach to tax administration and financial sector regulation. By expanding the regulatory perimeter, recalibrating reporting requirements, and embracing the realities of digital finance, these Acts position Nigeria to better safeguard its fiscal interests, promote financial integrity, and foster a more transparent, inclusive, and resilient financial system. 

Economic context

Nigeria’s economic landscape is undergoing a profound transformation, shaped by the evolving dynamics of wealth creation and management. At the heart of this shift are high-net-worth individuals (HNIs), family-owned enterprises, and a vast network of small and medium-sized enterprises (SMEs) that form the backbone of Nigeria’s informal economy.​

In the 2024 Africa Wealth Report published by Henley & Partners in collaboration with New World Wealth, Nigeria is cited as home to approximately 8,200 HNWIs (Individuals with over $1million in liquid assets) placing it third in Africa behind South Africa and Egypt as of 2024. In the last two years, the naira performed poorly against the dollar with over 60% depreciation. This will reduce the numbers of HNIs save for those who have proactive wealth protection strategies. Though foreign exchange rate is seemingly stable now with Central Bank of Nigeria interventions, wealth management in Nigeria has experienced a huge setback for individual assets with store of value in the local currency. 

The Nigeria tax reform introduces notable changes for individuals and owner-managed family businesses. With expanded definitions of residence, stricter compliance mechanisms, and a sharpened focus on wealth transparency, the new regime signals a decisive pivot toward progressive taxation and fiscal accountability. For Nigeria’s elite, the question is no longer whether the tax landscape is changing, it is how prepared they are to navigate it.

This insight series unpacks the key provisions of the Act, explores its implications for individuals, and offers strategic insights on how to stay compliant, optimise tax positions, and lead in this new era of fiscal accountability.​

Key takeaway

The new provisions represent a significant shift towards a more transparent, equitable, and globally consistent tax framework. By redefining tax residency, enforcing global income taxation, and extending regulatory reach to include​ offshore trusts, estates, and cross-border asset transfers, the legislation directly addresses the sophisticated tax planning strategies employed by HNIs. These reforms close long-standing loopholes, introduce higher tax rates for top earners, set clearer limits on property-related exemptions, and impose stricter disclosure requirements. With these changes, the Federal Government is sending a clear message that wealth will be subject to greater scrutiny. 

Background

The enactment of the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board Act (the “Acts”) signals a transformative era for public sector organisations in Nigeria’s tax landscape. Historically, Ministries, Departments, and Agencies (MDAs), as well as State and Local Governments, have operated with limited coordination and accountability in tax matters. These new laws aim to streamline tax administration across all levels of government, clearly define the roles of public sector organisations, and promote greater transparency in revenue collection. By integrating these entities more fully into the national tax framework, the reforms seek to build a more unified, efficient, and accountable system. Public sector organisations will now be held to the same standards as private businesses and are expected to play a more active role in achieving national tax goals.

Key update

• Creation of the Nigeria Revenue Service (NRS) with a refreshed Mandate - Federal Inland Revenue Service (FIRS) and assumes comprehensive responsibility for federal tax collection, while coordinating with State and Local Tax Agencies. All relevant updates have been detailed in a dedicated section on the NRS Act.​
  The Acts also raise the funding allocation for the NRS to 4% of total revenue collected, excluding petroleum royalties, in addition to other sources of funding. This approach differs from the historical standard set by the National Assembly, which prescribed a funding allocation of 4% of non-oil revenue. This clearer and broader funding base is expected to support and align with the NRS’ expanded responsibilities under the NRSEA.
• Establishment of subnational tax structures - Every Local Government is now mandated to establish a Local Government Revenue Committee, which will be responsible for the assessment, collection, and accounting of local taxes. This committee is to operate independently from the Local Government treasury and will manage the day-to-day administration of the Treasury Department. This structural change is aimed at improving the efficiency, autonomy, and accountability of tax administration at the local level.

Key Takeaway

Ultimately, these tax reforms redefine the public sector’s role in fiscal governance. Their success will hinge on diligent implementation, ongoing capacity development, and unwavering commitment to transparency at all levels of government.​

The Nigerian government has embarked on a significant overhaul of its tax incentive framework, signalling a strategic shift toward greater economic impact and fiscal responsibility. Central to this reform is the replacement of the PioneerStatus Incentive (PSI) with the newly introduced Economic Development Tax Incentive (EDTI), designed to align tax reliefs with industries of national priority. ​

Similarly, amendments to the Nigeria Export Processing Zones Act (NEPZA) aim to restore the original intent of export-led growth by tightening regulatory inconsistencies and redefining the tax obligations of Free Zone Entities (FZEs).Together, these reforms reflect a broader policy direction focused on curbing revenue leakages, enhancing transparency, and ensuring that tax incentives are both targeted, and performance driven.

Overview of Nigeria’s Export Processing Zones (EPZs) in Nigeria​

Nigeria’s Export Processing Zones (EPZs), managed by the Nigeria Export Processing Zones Authority (NEPZA), are central to the country’s industrialisation and export diversification strategy. As of 2025, NEPZA oversees over 400 licensed zones, with active operations in more than 50 across all six geopolitical zones.​

Over 5,800 enterprises operate in sectors like manufacturing, oil and gas, Information Communications Technology (ICT), and logistics. These businesses benefit from incentives such as duty-free imports, tax holidays, profit repatriation,and immigration waivers, while also integrating with the local economy through supply chains and workforce development.​

EPZs have created over 250,000 direct jobs and many more indirectly. Zones like Lekki, Kano, and Calabar have become industrial hubs supporting petrochemicals, agro-processing, and light manufacturing.​

Though export-specific data is still being consolidated, NEPZA reports over $30billion in FDI attracted to date. EPZs have significantly contributed to non-oil export growth, with Nigeria’s total trade reaching ₦36.6 trillion in Q4 2024—a 68.3% year-on-year increase.

Key takeaway

The NTA introduces a recalibrated approach to fiscal incentives, balancing the need to attract investment with the imperative of safeguarding national revenue. While the Act repeals certain tax exemptions under the Nigeria Export Processing Zones Act (NEPZA), it does not eliminate all benefits associated with Free Zone Entity (FZE) status. Key incentives remain intact, preserving the potential to drive investment into Nigeria’s Export Processing Zones, a positive step toward restoring the original export-oriented intent of the framework.

The NTAA, together with the NTA introduces a robust and modernized penalty and interest regime for tax non-compliance. The reforms are designed to enhance compliance, deter tax evasion, and ensure timely remittance of taxes across all sectors, including specialized provisions for petroleum and mineral operations. The new regime significantly increases penalties, clarifies enforcement mechanisms, and ties interest on late payments to prevailing financial benchmarks, reflecting both economic realities and international best practices.​

Penalty Regime

1.  General Non-Compliance Penalties -

• Failure to register for tax: ₦50,000 for the first month, ₦25,000 for each subsequent month.​
• Awarding contracts to unregistered persons: ₦5,000,000 per infraction.​
• Failure to file returns or filing inaccurate/incomplete returns: ₦100,000 for the first month, ₦50,000 for each subsequent month.​
• Failure to keep/provide records: ₦50,000 (companies), ₦10,000 (individuals).​
• Denying access for tax automation: ₦1,000,000 (first day), ₦10,000 (each subsequent day).​
• Not using fiscalisation system (for VAT): ₦200,000 plus 100% of tax due and interest at the CBN Monetary Policy Rate (MPR).​
• Failure to deduct tax at source: 40% of the un-deducted amount.​
• Failure to remit tax deducted/self-account: Amount not remitted plus 10% per annum administrative penalty and interest at the prevailing CBN MPR; up to 3 years imprisonment possible.​
• Non-compliance with information requests: ₦100,000–₦1,000,000 (first day), ₦10,000 (each subsequent day).​
• VASP (Virtual Asset Service Provider) non-compliance: ₦10,000,000 (first month), ₦1,000,000 (each subsequent month), with possible license suspension.​Failure to notify change of address/cessation: ₦100,000 (first month), ₦5,000 (each subsequent month).​
• General penalty for unspecified offences: ₦1,000,000 or up to 3 years imprisonment (or both).

b) Petroleum and Mineral Sector-Specific Penalties -

• Late filing of returns: ₦10,000,000 (first day), ₦2,000,000 (each subsequent day).​
• Late payment of tax/royalties: 10% of unpaid amount plus daily penalties (₦10,000,000 first day, ₦2,000,000 each subsequent day), with possible asset seizure or license cancellation.​
• Incorrect accounts/false information: ₦15,000,000 plus 1% of undercharged tax (whichever is higher).​
• Failure to pay mineral royalties (30 days late): 10% of royalty due plus interest.

2. Interest Payment Regime​

a) General Taxes (Non-Petroleum)-

• Interest on unpaid tax is calculated at the prevailing CBN Monetary Policy Rate (MPR) plus a spread determined by the Minister, accruing from the due date until payment is made.​
• For foreign currency remittances, interest is at the prevailing Secured Overnight Financing Rate (SOFR) or any successor rate, plus a ministerial determined spread.​

b) Petroleum and Mineral Sectors-

• For Naira transactions: Interest at 2% above the prevailing CBN MPR.​
• For foreign currency transactions: Interest at the prevailing SOFR or any successor rate plus 10%.​
• These interest charges are in addition to fixed monetary penalties and daily fines for continued non-compliance.​

c) Failure to Remit Tax Deducted at Source-

• Administrative penalty of 10% per annum of the tax deducted but not remitted, plus interest at the prevailing CBN MPR.