1. What is the current legal landscape for Tax Law in your jurisdiction?

Nigeria operates a federal tax system where the authority to impose and collect taxes are constitutionally shared among the Federal Government, the State Governments (including the Federal Capital Territory), and the Local Governments. The Federal Government primarily imposes and administers the following taxes: Companies Income Tax, Petroleum Profit Tax, Value Added Tax (VAT), Capital Gains Tax, Withholding Tax, Stamp Duties (for corporate bodies and residents of the Federal Capital Territory), as well as Customs and Excise Duty and other federal levies. The collection of Personal Income Tax and Capital Gains Tax and Stamp Duties between private individuals has been delegated to the States, while Local Governments impose minor rates such as tenement and licensing fees.

In 2007, significant reforms were made to the Nigerian tax system with the amendment of key tax legislation and enactment of the Federal Inland Revenue Service (Establishment) Act, 2007. These amendments introduced notable changes, including specific tax provisions for insurance companies, revised export processing zones exemptions, indefinite carry-forward of tax losses, and the abolition of investment tax credits for companies using locally fabricated plants. Following the 2007 tax reforms, the tax identification number was introduced in 2008, and the self-assessment tax regime became fully effective with the enactment of the Tax Administration (Self-Assessment) Regulations in 2011.

Between 2019 and 2023, the government enacted Finance Acts annually to update tax provisions and align them with fiscal policy objectives.

Despite these developments, Nigeria’s tax system remains fragmented, relying on complex legal frameworks consisting of multiple statutes governing similar taxes. For instance, on income tax alone, there are several statutes such as the Companies Income Tax Act, the Personal Income Tax Act, the Tertiary Education Trust Fund (Establishment, etc.) Act, the Nigeria Police Trust Fund (Establishment) Act, the National Information Technology Development Agency Act, the National Agency for Science and Engineering Infrastructure Act etc. Collectively, these laws impose various taxes and levies on the income and gains of companies and individuals, imposing burdensome and separate compliance obligations for taxpayers.

Currently, corporate tax is charged on the profits of Nigerian companies derived from trade, business, rent, dividends, interest, royalties, and other income sources carried on in Nigeria. The rate is 30% for large companies, 20% for medium-sized companies, and 0% for small companies with an annual turnover below ₦25 million. A minimum tax of 0.5% applies to medium and large companies that record no taxable profit in an assessment year.

Personal Income Tax is imposed progressively on individuals and non-corporate persons, ranging from 7% to 24% after deducting reliefs and allowances. Withholding Tax serves as an advance payment of income tax, deducted at source on dividends, interest, royalties, rents, and professional fees, generally at the rate of10% for companies and 5% for individuals. For companies that are resident in countries that have double tax treaties with Nigeria, the WHT rate may be reduced to 7.5%. WHT constitutes a final tax for non-resident entities.

Value Added Tax (VAT) is charged at 7.5% on most goods and services consumed in Nigeria. The burden of VAT ultimately falls on the end consumer. Suppliers are responsible for collecting and remitting to the tax authority. Certain items, such as basic food, medical products, and educational materials, are VAT-exempt, while exports and goods and services consumed by diplomats are zero-rated.

Capital Gains Tax (CGT) applies at 10% on gains from the disposal of chargeable assets, including property, options, debts, incorporeal rights, shares and digital and virtual assets, but excludes gains arising from the sale of goods in the ordinary course of business.

A major flaw in Nigeria’s tax regime is the failure to effectively capture the informal sector, which contributes significantly to GDP but remains largely untaxed. To be sure, many individuals in the informal sector, such as traders, artisans, transporters, and small business owners, could ostensibly not be taxed as they would qualify as small taxpayers based on their turnover. However, there is a significant number of persons in this sector that are well within the large and medium taxpayer, going by their turnover or earning, but are still outside the formal tax net. The problem is largely due to weak taxpayer identification and data systems, low tax literacy and poor recordkeeping, limited administrative capacity at federal, state, and local levels, and low trust in government fiscal transparency. As a result of these challenges, the country faces significant revenue losses and an imbalanced tax burden that disproportionately affects the formal sector.

State governments have attempted presumptive taxation models, but their effectiveness remains limited due to weak enforcement and absence of digital taxpayer databases.

Taxing digital enterprises, particularly fintech companies and cross-border service providers, continues to be a complex challenge. The Finance Acts of 2019 introduced the concept of Significant Economic Presence (SEP) for non-resident digital companies. The Minister of Finance issued the Companies Income Tax (Significant Economic Presence) Order, 2020, which established a thresholds for SEP. These thresholds are based on factors such as generating annual revenue exceeding ₦25 million from Nigerian users, or sustained interaction through digital platforms, websites, or applications. However, enforcement of SEP has been challenging. Key challenges include the difficulty of identifying qualifying transactions, limited frameworks for cross-border data exchange, and the absence of effective mechanisms to withhold or collect taxes on income generated by offshore digital operators. Consequently, while SEP represents Nigeria’s approach to taxing digital economy, its current application is insufficient and largely ineffective.

The most transformative reform came on June 26, 2025, when the President of the Federal Republic of Nigeria signed into law four landmark pieces of tax reform legislations: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025, and the Joint Revenue Board (Establishment) Act 2025 (collectively, the “Tax Acts”). The Tax Acts represent a decisive shift toward a coherent, technology-driven, and investment-oriented tax framework and their full implementation takes effect from January 1, 2026.

The Tax Acts repealed and consolidated all federally enacted laws into a unified framework aimed at simplifying compliance, modernizing administration, and reducing duplication. The new tax regime has introduced several key changes to the tax system, including the following:

a. Individuals earning below ₦800,000 per annum are now exempt from personal income tax. The PIT rate has also been adjusted to a new range of 0% to 25%, promoting progressivity and equity.

b. CGT rate for companies has been increased from 10% to 30%, aligning it with the corporate income tax rate and eliminating opportunities for tax arbitrage between trading income and chargeable gains.

c. Small companies, now defined as those with annual turnover of ₦50 million or less and total fixed assets not exceeding ₦250 million, are exempt from CIT, CGT, and the newly introduced Development Levy, easing their compliance burden and encouraging SME growth.

d. A 4% Development Levy is payable on assessable profits for large companies. This consolidates multiple levies, including the Tertiary Education Tax, Information Technology Levy, National Agency for Science and Engineering Infrastructure (NASENI Levy), and the Police Trust Fund Levy, into one single charge, simplifying compliance and reducing multiplicity of taxes.

e. Establishment of the Office of the Tax Ombuds to mediate between taxpayers and tax authorities, ensuring fair treatment, transparency, and timely resolution of disputes relating to taxes, levies, or regulatory charges.

f. Introduction of the Economic Development Tax Incentive
to replace the former Pioneer Status Incentive. It adopts a credit-based system, linking benefits directly to investment size, job creation, and sectoral priorities. This eliminates overlapping exemptions and enhances accountability in the administration of tax incentives.

g. Introduction of CGT on indirect share transfers, ensuring that gains from the sale of shares in offshore holding companies with Nigerian subsidiaries are subject to Nigerian tax (subject to treaty protections). The exemption threshold for share disposals is raised to ₦150 million within any 12-month period and the realised gains from the disposal must not exceed ₦10 million.

h. Adoption of a minimum effective tax rate (ETR) of 15% for multinational groups with global turnover above €750 million or Nigerian turnover exceeding ₦50 billion. This is an attempt to align Nigeria’s system with the OECD’s Pillar Two Global Minimum Tax standard, curbing profit shifting and base erosion.

i. Expansion of Zero-Rated VAT Items to include basic food items, medical and pharmaceutical products, educational materials, electricity generation and transmission services, medical equipment, tuition fees, and non-oil exports.

While the Tax Acts represent a commendable step toward a technology-driven tax framework, they do not adequately address the challenge of informal-sector taxation.

2. What three essential pieces of advice would you give to clients involved in Tax matters?

a. Prepare for the Transition to the New Tax Regime under the Tax Acts

With the Tax Acts set to take effect on January 1, 2026, clients must proactively seek to understand how the reforms will affect their businesses and tax obligations. Businesses should conduct comprehensive reviews of their current tax positions to identify provisions that may significantly impact their operations.

Early preparation– potentially by adjusting accounting systems, and revising business models where necessary — will prevent non-compliance and enable clients to take full advantage of favourable provisions such as the Economic Development Tax Incentive for qualifying investments.

b. Prioritise Compliance and Documentation

The new tax regime emphasises digital tax administration, mandatory e-filing, and real-time remittance mechanisms for value added tax. Businesses should invest in robust tax governance frameworks, including digital compliance tools, record management protocols, and internal audit mechanisms. This ensures not only accuracy and timeliness in filings but also positions the company for seamless engagement with the Nigeria Revenue Service under the reformed administrative framework.

c. Seek Professional guidance and Proactively Engage with the Regulators

The Tax Acts offer legitimate opportunities for tax optimisation for individuals and companies alike. However, understanding and navigating these provisions requires expertise. Clients should engage qualified tax and legal professionals with a strong knowledge of both the statutory provisions and their practical application. Professional guidance helps clients structure their affairs within legal boundaries, minimise exposure, and avoid aggressive schemes that may trigger audits or regulatory scrutiny.

3. What are the greatest threats and opportunities in Tax law in the next 12 months?

Major Threats

The most immediate threat facing taxpayers in the next 12 months is the operational challenge of transitioning to the consolidated Nigeria Tax Act regime by January 1, 2026. With less than three months remaining until implementation, many businesses and individuals remain inadequately prepared for the magnitude of changes ahead. Companies operating in Nigeria must review their tax structures and compliance processes in anticipation of the effective date, as strategic planning will be essential.

While the reforms are part of the government’s broader effort to drive economic growth, some provisions may open the door to constitutional challenges by companies. One key area of concern is the requirement that taxpayers pay the full amount of a disputed tax before an appeal can be heard by the Tax Appeal Tribunal or the Federal High Court. Another provision, empowering tax authorities to seize and sell a taxpayer’s assets without a court order, may be contested as an impermissible violation of taxpayers’ constitutional right to a fair hearing and access to justice.

The Act also grants the Nigeria Revenue Service expanded powers to enforce compliance, including improved access to taxpayer information, the ability to collaborate with other government agencies for data sharing, and the authority to deploy modern enforcement tools.

Opportunities

The replacement of the Pioneer Status regime with the Economic Development Tax Incentive creates opportunities for businesses willing to make strategic capital investments in priority sectors. Companies that proactively position themselves to qualify for the 5% annual tax credit on qualifying capital expenditure over five years, with the ability to carry forward unused credits for an additional five years, can achieve significant tax savings while building productive capacity. This is particularly advantageous for manufacturing, technology, agriculture, and other priority sectors where substantial capital deployment aligns with both business growth objectives and national development priorities.

The Tax Ombudsman creates an opportunity for taxpayers to amicably resolve tax disputes with the authorities. The Tax Ombudsman has the power to initiate legal proceedings on behalf of taxpayers and functions as an independent body empowered to investigate and resolve tax complaints free of charge.

4. How do you ensure high client satisfaction levels are maintained by your practice?

Our Tax Practice is distinguished by depth of expertise and a commitment to excellence. Our basic philosophy while advising our clients is to work as a team with the client, to be proactive, sensitive, creative, and responsive to their needs and aspirations. We consistently invest in the continuous development of our people, ensuring that every member of our team is fully abreast of Nigeria’s evolving tax landscape.

First, we invest time to understand the client’s business model, industry peculiarities, operating constraints, and strategic goals. Nigerian tax law is not applied in a vacuum; its implications differ across sectors such as energy, manufacturing, fintech, aviation, and telecommunications. For instance, the fiscal incentives and compliance expectations that apply to a renewable energy company differ sharply from those of a financial institution or a fast-moving consumer goods company. By understanding these nuances and aligning our tax solutions with the client’s commercial objectives, we ensure that our advice is not only technically correct but also contextually valuable.

Secondly, we recognise that one of the greatest frustrations clients face in Nigeria’s tax space is uncertainty about policy direction, administrative practices, and timelines. We prioritise staying fully updated with legislative amendments in the tax sector. Our team continuously reviews circulars, guidelines, and public notices issued by the tax authorities and other relevant bodies. This constant monitoring allows us to interpret new provisions accurately and promptly, ensuring that our clients always receive guidance that reflects the current legal framework. We also issue regular client update alerts on all tax law reforms and tax developments. Clients are promptly informed of any changes that could impact their business operations, such as new compliance deadlines, revised filing procedures, or updated tax rates. Communication also extends to accessibility. Our partners and associates make themselves available for prompt consultation, whether through calls, emails, or meetings (virtual or physical).

Thirdly, we integrate technology and process management into service delivery. In line with global best practice, our firm utilises secure document management systems, and digital workflow tools to ensure that projects are efficiently handled and that deliverables are traceable. This is particularly crucial in tax disputes and audits, where document control and procedural deadlines can determine outcomes.

These three (3) factors are integral to our approach in all the work that we do for clients.

5. What technological advancements are reshaping Tax law and how can clients benefit from them?

Recent technological advancements are transforming the tax landscape in Nigeria. At the statutory level, the Tax Acts explicitly contemplate a modern, digital tax administration as the backbone for achieving broader tax coverage and improved compliance.

One of the most important innovations is the introduction of the TaxPro Max platform, which allows taxpayers to handle virtually all aspects of tax administration online, from registration and filing to payment and receipt of tax clearance certificates. This system has streamlined compliance processes, reduced delays, and increased transparency.

Another consequential development is the introduction of mandatory e-invoicing and real-time invoice reporting. The FIRS has commenced the implementation of the Merchant Buyer Solution (FIRSMBS), an electronic invoicing system designed to modernise fiscal and transactional processes in Nigeria. The FIRS has phased the rollout so that large taxpayers must register and integrate their invoicing systems with the FIRS platform. This e-invoicing system represents a major step toward the full digitalization of tax transactions. Under this system, all VAT-registered businesses are required to issue and manage invoices electronically. The e-invoice replaces traditional paper or manual invoicing by digitally capturing all relevant transaction details, including buyer and seller information, goods or services supplied, quantities, prices, and taxes and transmitting them in real time to the FIRS. The e-invoicing system is designed for all categories of transactions: Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G). It ensures that all invoices are validated instantly, thereby providing real-time visibility into commercial transactions. This shift reduces opportunities for under-reporting of sales and VAT leakage.

In addition, the Tax Appeal Tribunal (TAT) Rules 2021, has introduced an electronic filing system. Any court process can now be filed at the Tribunal by approved electronic means. This is to align the Tribunal’s filing system with developments in information technology. It is a welcome alternative, making the filing of court processes less cumbersome, saving time and effort. It is expected that the Tribunal would put in place the necessary facilities and platforms required to achieve the efficiency and effectiveness that electronic filing offers.

Clients stand to benefit enormously from these digital reforms. The automation of tax filings and invoicing eliminates much of the manual paperwork and human error that previously characterized the Nigerian tax system. Through platforms like TaxPro Max and FIRSMBS, companies can now file returns, pay taxes, and generate invoices remotely, saving valuable time and administrative costs. The FIRSMBS e-invoicing system also enhances accuracy and compliance by ensuring that every transaction is properly recorded and verified in real time. This means businesses can confidently prepare their VAT returns, knowing that all sales and purchases are accurately captured in the system. The real-time validation feature further helps prevent disputes, fraud, or underreporting of tax liabilities. In addition, clients benefit from greater transparency and audit readiness. Since invoices and filings are automatically stored and retrievable, companies have complete, well-organized digital records for tax audits or regulatory reviews. The system’s interoperability with different accounting platforms also means that even large corporations with complex financial systems can integrate seamlessly without disrupting their internal operations.

Ultimately, these technological advancements foster efficiency, trust, and predictability in the tax environment, allowing businesses to focus on growth while meeting tax obligations timely and accurately.